2 months later: USDCHF finally paid off

Finally it paid off, well some of it

I took off a majority of my position on Friday at the 0.9760 level due to structural resistance. While it did drop after, I beleive there is more strength to go.

Part 1: CHF Weakness via Central Bank Intervention

I wrote on my wall that I did not think the SNB would like the dollar to be too strong against the dollar and levels for the EURCHF were close to the previous floor that was set by the SNB.

Since then both crosses have seen CHF weakness.

The EUR though, continues to soar. I believe in the long term, this faith is misplaced, but for now, let us leave it as that.

Part 2: USD Strength yet to recover

The reason why I am taking this direction is because a weak US dollar affect practically everyone. As the reserve currency of the world, there are implactions. 

Sentiment is weak for America because of the turmoil in the Whitehouse and I do not expect it to get better, but global implacations will be there. Moving too quickly too fast will cause some problems.

https://static.seekingalpha.com/uploads/2017/2/7/1693591-14865128824778109_origin.png

Oil for instance, involves the US Dollar, the higher the oil price in conjunction with the dollar the more one will make in their home currency.

This does not affect shale oil producers who have their expenses in US dollars and revenue in US dollars. But in a place like Russia where Revenue is in US dollars but expenses are in Rubbles, there is a large effect against the companies.

Now the same senario is terrible for countries who are dependent on oil. Oil prices have already recovered slightly on the back on the weaker US dollar, but this double whammy effect needs to be taken into consideration in the broad global market.


The DXY though has yet to bounce to a level where i am willing to say, "the dollar is going weaker from here". When that happens i will take out my other position. It helps that the USDCHF has a positive carry so i will get paid a small amount per day to keep the position open, this way i can afford to be patient.

Is Winter Coming? Being Wrong vs. Not Yet

I use this euphemism as an example because so many things in my thesis are correct yet last week's comments from Yellen were "dovish" the market rallied and the USD strength fell and the SPX recovered.

SPX

Recap of thesis:

- PE multiples are high

- Earnings are likely to diminish

- Interest rates are heading up, risk premia for equities should be higher hence P/E should fall

For my SPX theory, I had reckon that the market is expensive and should not be so high. Nothing has changed. Yet, the market has continued to head higher.

We have had a threat of a POTUS impeachment, higher interest rates and the a "failed" Trump trade. Yet the stock market has not corrected.

Perhaps this is the ETF market has continued to pushed the market higher. A 2% correction was seen as a buy-the-dip opportunity. Either way, this market still wants to go higher.

If winter comes, it may be August, and this is where most traders are not at their desks and where the most unexpected usually happens, but if nothing happens here I will stop out of the trade.

Perhaps a 2500 mark is a good place to double down for a short correction, but at most I expect a 1.5% - 2% correction unless we see a big market moving reaction.

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USDCHF -

For the CHF the thesis was as follows:

- SNB does not want the CHF to be too strong

- The dollar index should correct somewhat

For the first part it still holds true, both on the USDCHF basis and the EURCHF basis.

While the EUR has strengthened against the CHF it is still below the 1.20 level which was previously the floor for the SNB. There is still some way to go before the SNB is happy again.

The USD may not seem like as big a deal to most as trading between EUR members is more prominent, but the US does make up 21% of exports.

Last week's print in the import export number should be evidence to the need to adjust.

So in view of this the CHF should still weaken. Against the EUR and the USD.

However, the dollar index is falling like a rock.

USD smile theory dictates the dollar should strengthen on global markets being either very weak or very strong. Right now the indices are higher, indicating the market should be strong. Pundits and economic "experts" however, have contradicted this by saying the Trump reflation trade is over, hence the weak dollar.

Both side however, would be supportive of the smile theory with a strong dollar. This has not happened.

Right now the DXY and Dollar index have reversed to levels seen before the Trump trade. A recovery of any type has yet to be seen. If this was any other level, I would say this may never recover but these levels are significant.

USDCHF also has a significant support level at 0.945 or 0.95 level, if it beats this I will exit. But right now I do not see this being a threat.

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The SPX has not worked out for me, in the words of the SNB, I have been "overwhelmed by the market". I am hoping for a slight correction off the 2500 level and i will exit at a loss. Hopefully managing this as best as I can. Unless there an altering news event then this is how the thesis has changed will hold.

The USDCHF is looking good despite the large drawdown, i do fully expect this to recover. I have no reasons to believe it will be otherwise.

My reflections: I just tried auditioning for 2 prop firms (Part 2)

1st Target for eToro: All-Weather

My All-Weather strategy has not been used simply because ETF leverage is very expensive. I did not know this until I tried to make my first trade.

Also more instruments have been added to eToro, I need to incorporate them in. But I need some money to do that research, data isn't always free.

But once this research is done, I am likely to use this exclusively on the eToro network.

2nd Target: Macro

I aim to get back to scratch back to a breakeven year at 0% from there I will look to employ All-Weather exclusively.

Risk vs. Effort return

The reason why I am taking this direction is because i am seeing that traders on the eToro network are looking for good returns, i.e. in the ballpark of 10%+ per year. 

The amount of effort and energy required to allow for consistent performance(like how i was trading for the prop firm) is not scalable on the eToro platform. i.e. i can make 1000% with $500 but not with $500,000. The reasons are varied but generally it is non-scable.

10% though is a lot, especially considering where interest rates are at the moment. Can this be achieved with the all-weather, I believe so, but with some leverage. 

The all-weather i meant to be a fire-and-forget strategy because it concentrates on the long-term cycles. While demographics, politics and other factors may influence its performance, most of it will be noise to the strategy. 

It makes for an interesting almost "one-size-fits-all" strategy because it is easy to understand and requires less effort to manage, allowing me to spend my time earning eToro income on the side. 

eToro: Where does it fit in my mission

For those seeking better returns above 5-10% can find other means of improving their returns, but if it is by copying, it requires a certain amount of effort and luck. This not just on the copiers part but the person being copied.

Element of luck is something that I scorn when looking at finance because this is perciesely why i started on eToro in the first place. It is undeniable, but i would like to avoid that element as much as possible.

I started on this eToro journey to help people who do not understand finance, not help those who are willing to put in the work. Help in a nieve manner but a sincere manner. Right now this is as sincere as its gets.

What is effort

The other route of effort, that is something that can be learnt from various sources but requires work. Something most people won't be able to do, and most will blow out. There is a reason why 95% of traders fail.

Most education providers are scam artist (see: https://www.tradingschools.org/), no matter how much you research you are not going to find reliable reviews because so many are incentised via marketing. Trading schools is really the only one I would trust.

Even then, for the highly rated providers expect return less than 20%.

The myth of riches is something that cannot be removed from the image of traders.

So 10% for a copied fire-and-forget fund is actually pretty good. 

What about my high percentage FX trading setup?

I may move my macro FX trading system is still something i believe in and i can still run it. But i will move it to another platform. This is really for my own personal highly leveraged returns, with small amounts, but eToro strength is in its ease of use and social aspects so i will use it for those purposes.

My reflections: Auditioning for 2 professional proprietary trading firms (Part 1)

Sorry all.

I have not been very active over the past 3 months, the reason being I have been trying out for 2 different prop firms and it has consumed most of my time. One with a global mandate (trade any instrument on the platform, very similar to eToro) and the other futures.

I signed non-disclosures so I cannot say exactly what I did, but I can talk about what I learnt from my experiences.

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Games we cannot play: Market timing - A lesson in Oil

I have been an avid supporter of Macro type trading because it is based on principles we can understand. And if we are wrong or when the market has overwhelmed us, we can understand why.

But alas 1H2017 was miserable for me on eToro. So is macro usable by retail traders?

This certainty is something I have taken pride in through my research, but yet I have found timing is always a problem with this type of trading.

An example of this was OIL where I shorted at $46.97, well before the OPEC meeting, it went up to $51 and in between I tried to trade it and got completely wrecked. But was my thesis wrong? Looking at price now, no.

I have learnt over the course of the last few weeks, modern macro traders use options to try and elevate this concern. As retail traders, perhaps an approach could be martingale, it negates the requirement to be correct on completely correct on timing but IF wrong, must exit immediately.

I have been very critical of this method because many eToro traders blow up after using this method but if used correctly, I suddenly find it has its merits.

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Games we cannot: Know your role - Outright futures are difficult to play

One of the firms I was trading for used DOMs or Depth of Market, this shows you the order book and you can take positions based on the order book. This method of trading is highly profitable but at the moment is not available to retail traders.

It is not for our purposes but what I have found is that it is profitable on a daily basis. Scalping profits daily.

It is not accessible by retail traders and even for Gold and Oil provide a very different set of data which if one does not have access to puts one at a huge disadvantage.

Looking at Oil, Gold and even indices, is it even fair for us to try and trade these instruments intraday? Probably not. These instruments we have to stay away from in intraday basis, here I will either do daily or weekly candles only.

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We all lose

Even at the prop funds where I was trailing for. Psychology of losing is so important.

There will be periods of not making money, but it does not mean you are bad, just conditions maybe have changed or some other reason. 

Part 2 coming soon.

3% a month Thesis? - Black Swans are rare in a Fragile Market

I have recently picked up Nassim Taleb's book Anti-Fragile. For copiers & followers, you will know that I am a huge fan of this man.

Black Swans is often where I live. And here instead I am taking the opposite view. Why? Monthly income.

As much as I love macro trading, in terms of frequency, it is not quite enough to live life. In 2016, according to Eurkahedge analytics, global macro style funds only made 3.77% in 2016. YTD 2017 only stands at 1.27%.

This is not a stat which is palatable to the eToro community. But who am I to beat professional managers? The answer lies in market structure and leverage.

If I can play in the space where retail traders mostly fail in a more controlled manner perhaps I can be successful. 

These certain advantages also are available which may be why this thesis should work for my copiers.

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Fundamental Structure:

We are in a fragile market which is not used to shocks. Thus, volatility is generally low across asset classes. The Market Structure have evolved to a point where it does not allow for it. With High-Frequency Trading Algorithms and dark pools means that overbought and oversold conditions are quickly reverted to a mean.

Using eToro being a Level 2 / STP (Straight Through Processing) allows us to take advantage of a great amount of relative liquidity in a low volatility market.

This system is temporal; I do not think it will exist 10 years into the future. It is a temporary arbitrage. It is also only available because I have a small amount of capital, scaling this system up will likely fail.

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The details:

There are three flushes of liquidity in a day, they are during the Asian Open, the European Open and the US open.

If the early part of these sessions produces a breakout, it should retrace to the mean quickly. High-Frequency Traders, Dark Pools and the like will sell (buy) overbought (oversold) conditions using RSI, MACD or MA which are programmable. It should then return to the mean quite quickly.

How can I trade these? Using MACD/RSI/MAs are probably arbitraged away and I probably can't be fast enough to get in. But what is not programmable quite yet? Chart Patterns.

It is difficult to program what a bullish engulfing candle is, but it is not hard to see how such a pattern could equate to a crossover of the MACD histogram. We can take advantage of this till it programmers finds a way to take advantage of these.

During my test, I was able to find a sweet spot at a 10 pip TP level while SL was 15 pips. This had an 80%+ success rate.

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System failure:

The system fails during economic news or sentiment which doesn't allow the market to remain in its low volatility state. So it is key to avoid these timings. This system is not predictive of the news.

It also fails during low volatility periods 2hrs prior to entering the trade. Lower than 19 pips.

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How I test my system:

Painstakingly. I will do a YouTube video to show how I do it.

 picture of my excel test results

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Currency Used:

Only USDJPY due to lower spreads and also high trading volume. This should result in a lower standard deviation from the mean.

I have tried it with GBPUSD, but it has not worked out. For one the high spreads are a concern, the second if the runners tend to be quite frequent due to the European session. The spreads are no fault of eToro I understand this is the service that they offer. So, for now, USDJPY seems to be the most workable on eToro.

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When am I going to start:

I started today, making barely breakeven because I wanted to test the change to my risk score. I will scale accordingly because I rather my risk score remains lower.

If all goes well, I shall start properly tomorrow.

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Review 2016 - I was once a (pure) copier

Especially to copiers/investors and followers,

Thank you!

I wanted to start this letter by thanking those of you who have been copying / following me on this journey, regardless if you have seen my vlogs on YouTube, you felt my joy and frustration from following me on my eToro wall or because you read my thesis(es) on my website.

Regardless, my eToro 2016 journey has been bumpy and ended not how i would have wanted, seeing my short USDJPY thesis fail.

Ultimately though, I am super thankful for the opportunity eToro has given me. To be able to transparently communicate my philosophy of trading, one that is not founded in short-term expectations & greed but looks at a sustained horizon. To explain this philosophy in full, I would literally need to write it a book, till then I am calling it the "Huzza-equilibrium of return” or something like that.

My "Huzza-equilibrium" will need something like 12 years to prove in full. But for now let’s recap the beginning of this journey, April 2016.

Above: Cheers from my wife and I (not sponsored by Boost)

          

Review 2016

I was once a Copier

Some of you may not know this, but when I first started out on eToro, my goal was to copy other people. I knew from losing a lot of money that trying to trade while holding a full time job was very difficult.

We all have our individual work stresses going on, not to mention wife, church, family, gym. Trading was just too impractical and draining to do after work.

But we are told, if we don't put in the work, we can't get more money. So how can we put our money to work? We all know from books that we can't trust our financial advisers who are all only out for our money and not our long term well-being. With so many things to do with our lives, finance should not be one of those things where we stress out so much over. Yet 31% of married couples report money as a source of conflict!

Along came eToro. A platform that aligns our interest with our fund manager because they treat our money as how they would treat theirs. So I was on-board, I put some money in and tried copying other people. 

One Year Challenge

Ultimately I found that there were things I liked and things I HATED. So around June I stopped copying completely and decided to commit to this Full-Time, joined the popular investor program and embarked on my 1 Year challenge, to live off of profits from eToro for 1 year.

I even went from being a 4hr chart trader only, to a part 4hr and part 15 min chart trader, to a full 15 min super short term trader!

In October, I became a Cadet Popular Investor. At the time of writing (15 December 2016), I have about 201 copiers, 3,736 followers and US$78k AUM. And I thank you all so much for joining me along this journey!

It has not been easy, a few times I wanted to give up and go back to getting a regular job as not having a steady paycheck with a "comparatively" small amount of capital & risk is difficult.

But I imagine changing the world of Finance and making it easier and for the betterment of even 10 people. And that motivates me to continue on this journey.

Trading Thesis 2017

Most reports like these give economic Outlooks, which tend to be very vague. So instead here are an updates on what I will be trading.

USDJPY Thesis

I will be retiring the USDJPY thesis. Even though it has been the cornerstone of my investment performance over the months, it has reached a point whereby i believe fundamentally it will no longer have a large favorable risk symmetry. The Japanese Fiscal & monetary pressures have therefore run its due course. Unless it retraces back to the 108 level, we will not revisit this.

The next question is, will Japan default?

I would like to trade this, but the appropriate instruments to express this view are options and Credit Default Swaps (CDS), which are complicated and not available via the eToro platform. So we will stop at that.

GBPUSD Thesis

Our GBPUSD thesis will continue to be in play. The GBPUSD, like all currency pairs, runs on the mechanics of demand and supply.

Depending primarily on the outcome of Brexit and its terms, these two variables are unclear. The potential impact of Brexit may actually be close(although unlikely) to negligible. Especially given the comments that the UK will still "pay for favourable terms within the EU"

But for the moment, Theresa May is still fighting Article 50 and economic indicators plus the recent Autumn paper have been quite sanguine about the outlook of the UK.

My initial thesis compares the position of UK vis-a-vis the position of the US at the same point in the 1970s where the cross was this low, the thesis continues to hold. Retiring of the thesis will depend on 1) receive clarity on terms of Brexit or 2) economic paradigm shifts for either country.

Upcoming Thesis(es)

New thesis in the pipeline including, Gold, USDCAD and AUDUSD. All of which are heavily commodity related.

Depending on correlation bias between the 3 theses, I may only launch one or two. More updates on my blog soon.

Goals 2017 

The aim is 20 - 24% return, mainly because this is what i required of me to live off. While i do hope to get more, putting targets on what the market should or should not give is not healthy.

What would be healthier is prioritizing capital preservation over returns, and that is what I promise I will definitely be doing.

Learning

I love practicing martial arts and knowing you are never complete is part of the journey. This year, I have completed what is necessary for Master’s in Science(Finance), read conservatively 40 books and listened to over 100 finace related podcast episodes (go listen to “@twoblokestrading” They are part of the eToro community!). Yet I feel like I have barely scratched the surface of what Finance truly is, I hope to continue to learn and evolve for 2017.

Above: Handing in my Masters thesis

Other Targets

• Specifically, for those who have been copying me, I hope to come up with a Udemy course by end 1H2017. There is too much information out in the world, and I hope to filter and condense information to give you a framework for finance as a whole. 
• Continue to vlog on YouTube and maybe start a Facebook page.
•  I would also like to do some marketing of the eToro brand, but tangibly i have not quite reached an idea as yet. But I will have to set some targets on that soon.
• I would like to achieve Elite Popular Investor status, but i rather let the community decide if i am worthy of the title. Hence it is not a goal specifically.

Special Thanks  

•           To God, for giving me all things and everything!

•           To my copilot in life, my wife Nicole thank you for loving me for who I am, always encouraging, and being super supportive with me on this journey. I know what I do is confusing, but thanks for trying to listen anyway.

•           To my mom & brother for never giving up despite so many shortcomings, and thank you never ending patience, love & support.

•           Todd, my performance coach, for keeping me sharp when times are bad.

•           Boulos Shakkour for being a great account manager, encouraging me to join the PI Program, and making my life easier.

•           To Annie Charalambous and the eToro popular investor team, thank you support and guidance.

•           And to Yoni Assia, thank you for creating this marvelous community!

Finally  

So here's to love of making the financial markets a better place….

                                    To transparency and honesty in all we do…

                                                           …..but most of all, here is to loving each other as we love ourselves!

Raise your glasses to embracing a new honest world of finance and here is to a successful 2017.

God Bless!

@FundManagerZech

www.zechz.com

Youtube: FundManagerZech 

Vlog & November withdrawal: ~$1,200

Sorry New Peeps!

Being Honest: Its not Enough

Honesty

My goals for Etoro have changed. My singular focus of this trading account is to provide monthly income, and in doing so, help others achieve financial freedom.

Since I have joined the popular investor program, I promise, to be honest, and transparent.

With that said.

It is NOT good enough

The past 2 months the USDJPY system has been great for me! Till last week where my system didn't return anything for a week. And it lost me some money today.

So reality check, it is not enough for my goals of monthly income. I do not have all the answers and do not know everything there is to know.

I need to get better.

Dirty Secret of the industry

As a partial academic (I am perusing my masters in Finance), my understanding is different from most people when it comes to selecting managers.

Warren Buffet says it best (full article here):

Buffett begins by imagining a nationwide coin-flipping contest. Everyone in the country participates and calls the flip of a coin. Call correctly and move on to the next round, guess wrong and you're out.

After 20 days, about 215 lucky flippers will have correctly called 20 consecutive flips. They gloat in success, yet the nature of coin-flipping tells us they're just lucky. It's a game of random chance.

But what if all 215 flippers lived in the same town? What if they all hailed from the same school? The same fraternity? Then we'd get excited. The laws of probability suggest 215 winners after 20 days. But those same laws tell us that if all 215 belonged to an associated group, that almost certainly wouldn't be the product of random chance. These 215 flippers clearly would know something we don't.

The real flippers in Buffett speech are nine "superinvestors" -- himself included. All nine crushed the market averages over multiyear periods by between 8% and 22% per year.

In a world with millions of investors, such returns can occur by sheer luck -- just like the 215 coin-flippers appeared at first glance. But all nine superinvestors hailed from the investment school of Benjamin Graham and David Dodd -- Columbia professors now known as the fathers of value investing. That meant something big. It meant that their success wasn't the product of luck. It almost had to be attributable to the only common link they shared: the investing philosophy learned from Graham and Dodd. The "intellectual origin," as Buffett put it.

Credit: Photospin

Learning from the best:

I echo these thoughts and want to be part of the superinvestors. I have thus dedicated the basis of my trading on the best Macro traders and thinkers of our time and all of my systems have been based on these concepts.

Ray Dalio - Credit Cycle

Nassim Nicholas Taleb - failure of bell curve statistics and asymmetrical risk

Michael Marcus - Trinity of trades (Fundamentals, technical and sentiment)

George Soros - reflexivity

But for my 3 systems at the moment, they have to change because it isn't good enough to reach the goals.

I will choose hold on to nothing if it does not benefit this goal. And unfortunately, this includes my beloved 4hr system which has not failed me since I was doing my undergrad.

Rigorous Testing

Copiers and followers, do please know I do test my methods before applying and never risk capital to test anything. It either works or it does not.

I do not believe in eyeballing charts either, IT DOESN'T WORK! So anyone showing you past data with the benefit of knowing future movement. Like so many YouTube gurus. So please take it with a pinch of salt.

I have my own way of testing and if you would like to hear more, drop me a comment or write on my Etoro feed and I might do a blog post on it.

Stay safe people!

Going Back to Tradition: Trading on my own

So unfortunately, for those of you who have been following me I had this moment where because of a trader I was down over $4,000 of my $15,000 investment. Now this isn’t significant for some people, but for me it was for 2 reasons. It was the trader who did so made the most money for me thus far and I lost sleep because I had to manage it manually to ensure I didn’t lose more than I wanted.

I realised something really important, despite all my analysis, there still isn’t information sufficient enough to create a solid plan to trade profitably just by copying. 

I believe i can provide a value service to the community at etoro by being absolutely transparent and being a human being behind the numbers. But i can prove my system works!  

So I’m going to go back and try it on my own using the same system I publish previously. But I do want to improve the system as well and so I’ve been on a book binge to improve. 8 books down and i am happy to report i have learnt so much!

I will post more updates on the improved system soon.

NIC Index February & Market Overtone

- Index performed poorly this month, -6.22% in a volatile month

 Market Overtones
 G20: Underwhelming (All), 
PBoC Cuts Required Reserve Ratio (All), 
Oil Oil Oil! (OIL/AUD/CAD), 
Central Banks Continue To Tussle (USD/JPY/EUR), 
Brexit! (GBP & EUR)

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NIC Index

The 50 most popular investors in etoro(for more on this, please click here) were not well performing well for this month, this is not surprising given the volatility of the market. However selfishly this has been a fantastic two months of to really see how the traders perform. More on this in a post coming soon.

Key economic overtones affecting currencies/ETF for the next month:

G20 - Underwhelming (All)

The G20 meeting didn't impress with the world economies not seeming to increase market confidence in an overall coordinated stimulus program. The thing about trading markets is most of this is perceived confidence, as in if there were strong statements by politicians perhaps the general news from all the FX/ETF/Investments sites would report a positive on confidence, but when we see headlines such as "G20... Underwhelming... not impressive.. No concreate action... etc" we tend to think that maybe they don't think a global recession is on the horizon.

With the recent slump experienced in the global equities market for the past 3 months, this may not be surprising that some portion of the market think this is happening. Personally I think it has to, we have been living in a time of low-interest rates, leveraging has been high. One can argue that other countries such as Japan and Europe are still providing low interest rates, but as short term view traders in FX and ETF, we only care about the mood of the Mr. Market and he is having some really bad diarrhea at the moment.

Those expecting this downward trend to end soon might have to wait a little longer. This will specifically affect ETF traders with long term views, be careful of resistance levels not holding as strongly as one would expect.

PBoC Cuts Required Reserve Ratio (All)

The Chinese Central Bank has decided to cut its required reserve ratio requirement for the banks. One of the main purposes of this is to provide liquidity in the market, and effective 1 March, this will drop by -0.5% to +17% (in line with expectations). While the numbers in themselves do not mean much, the comments that they made were quite interesting, “guide stable and appropriate growth in credit and create appropriate monetary and financial conditions for supply-side structural reform”, likely meaning they are trying to maintain their target growth rate.

China has been pretty much a one trick pony when it comes to stimulating the economy, at the moment they are looking at increasing the liquidity till their "one belt one road" can provide some much needed fundamental upside. But till then, I feel China will continue to cut rates till they reach their target growth rate.

The most affected by these comments should be the commodities and related currencies for volatility (AUD & CAD), although I feel this is likely already priced into current levels. Mr. Market tends to overreact a lot of the time, and when first news of all the myriad of slowdown, raising interest rates and not to mention oil slump, we can already see the major drop in the currencies.

Speaking of which!!

Oil Oil Oil! (OIL/AUD/CAD)

Oil (which we can trade on etoro directly, though i will not focus on this due to my lack of understanding of this instrument, I have some exposure outside etoro, but they are stock related so far far less volatile and doesn't need to be traded at frequent intervals) the top global producers agreed to discuss fresh efforts to stabilize the market. The Venezuelan Oil Minister Eulogio Del Pino that they would include Saudi Arabia, Russia and Qatar, to steady prices. OPEC-Russia also announcement to freeze production output.

However this on-again, off-again deal that has been in the works for weeks,

To be absolutely honest with you guys, the fact that oil has slumped 70% over a 20-month rout is mind blowing to me. Again I have no expertise in commodities, my circle of confidence is still within the FX / ETF space. But any rout so heavy without a correction is scary.

For us though, just keep an eye on the commodities currencies.

Central Banks Continue To Tussle (USD/JPY/EUR)

Mr. Market might be in a super bad, a good mood, or just kinda cruising along on the Fed (March 16th), ECB (10th) and BoJ (15th) for later this month depending on what kind of monetary policy clues is presented to him.

JPY - "BoJ Governor Kuroda reiterated that Japanese policy makers stand ready to lower rates further if necessary, monitoring the impact of negative rates on markets and the real economy." Yes, yes, we can go on and on about Abenomics and its effect but let’s not, again, lets focus on Mr. Markets and his moods, interest rates up, unhappy and yen goes up? Maybe happy and yen goes down? Time will tell on this one. Mr. Markets is very unpredictable.

Oh by the way, the governor has pledged to continue with negative rates and QE until their +2% inflation takes hold.

EUR - The European Central Bank is a funny one to watch with ECB chairman Draghi stating the bank will be swift to act. But this may not be true especially given not all board members see eye-to-eye. French board members already talking about the need for anticipated extra easing measures. The German board member agreed however said that said it would be dangerous to further expand already “highly accommodative” monetary policy given the longer-term risks and side effects of negative rates. So now what? Hopefully the best and brightest from Europe can figure this out.

The thing about these combined currencies, is historically they don't last, as in after a while they disband at some point of time. People argue that the US has done it for a long time, and that is true, but they also had a single government, without this, there tends to be a disconnect between policies which protect the economy and social policies. The Bank of England’s former governor also said the same, stating its “created a conflict between a centralized elite on the one hand and the forces of democracy at the national level”, producing dangerous consequences.

Not a déjà vu but speaking of which

Brexit! (GBP & EUR)

The Brexit is also an interesting one to watch, like mentioned above, it doesn't traditionally work to have a combined currency. The divergent social and economic issues is a real issue, and another factor is the strong GBP vs. the weaker cable, it is a disadvantage to Britain. They do stand to benefit to gain from preferential economic agreements between the Eurozone members, but losing out on social issues might be too much for them

If the Brexit (Britian Exiting the Eurozone happens), the Grexit (Greece Exiting the Eurozone) becomes far more likely. And given the sheer amount Greece owes to the various countries. This might become a major issues.

Do continue to watch the GBP & EUR currencies as D-day approaches.

My First Crusade: Selecting Traders

Tada! After evaluating a whole lot of traders, here is a detailed analysis of the traders I will be copying. But before I copy with real money, I need to ask the traders a few questions following this analysis. One of the brilliant things about Etoro is the ability to speak to the traders directly, so why not use it?

I will post updates at a later time. Do subscribe to my blog below to get continuous updates delivered to your inbox.

So far, these are the traders I have identified.

My evaluation criteria has been outline in my post: "TheScience/Art Of Evaluating: What To Look Out For When Selecting A Trader"

Trader 1: Newstrader

1)      Portfolio – Mostly FX and ETF, within my criteria

2)      Average return and loss – Not too bad on the risk reward, what I really don’t wish to see if 20% upside return but 80% average losses. This would probably mean the trader is holding on to bad trades and waiting for the tide to turn in their favour and only taking losses on really bad events.

3)      Historical trades - The historical trades as far as I can tell is not averaging down, however there seems to be opening of 3 positions per entry. This is probably a question I would like to pose to the trader.

4)      Returns per month against the NIC index – this trader performed at -0.32% against the index, which means against the 50 most popular traders on Etoro, he has a return slightly below the average. I am personally looking for inline or above the index.

 Trader 2: Doew85

1)      Portfolio – Mostly FX, within criteria. Mainly a GBPUSD and USDJPY trader, most traders on Etoro are EURUSD Traders so this provides some element of diversification.

2) Average return and loss – Excellent risk return on this trader, his average losses are much smaller than his average grains for the 3 most frequently traded instruments. 

3)Historical trades - The historical trades as far as I can tell is not averaging down, however I do see a tad bit of revenge trading, might ask trader about it.

4) Returns per month against the NIC index – this trader performed at 37.47% against the index, this is the best returns against the index that I have found that fits my criteria.

Trader 3: Sameerah786

1)      Portfolio – Almost 100% FX, within criteria. Mainly EURUSD, GBPUSD and GBPCHF trader.

2)      Average return and loss – I am a bit divided on this point as risk reward ratio for the EURUSD seems to be significantly less than a 1:1 Ratio i am looking for. I will check with her on this, if answers are inline with my own risk tolerance I will still copy here.

3) Historical trades – I have one thing with this trader that I can’t seem to reconcile. This would have to be related to my above point as well. 100+% loss on this trade and 2 trades nonetheless. It happened twice and it is strange, other than that great trader.

4)      Returns per month against the NIC index – this trader performed at -5.98% against the index, this is the low compared to the index and even the watchlist. However I needed two traders with a low standard deviation but stable returns because of the portfolio theory nature of diversification. More on this will come in a later post.

Trader 4: Tradingrelax

1)      Portfolio – Almost 78% on FX and ETF. Within criteria, I don’t like the stock element but I don’t mind because it’s of a low percentage.

2)      Average return and loss – It is not great, specifically there were trades that took a loss of 100% the reason why the risk reward wasn't great.

3)      Historical trades – Same as above, strange amount of losses, will ask trader about it. Seems to only be on EURUSD though, the gold only took one loss but at 15%, but then again it was only a single loss out of 18 wins. 2.16% returns overall.

4) Returns per month against the NIC index – this trader performed at -7.56%% against the index, this is the lowest in my active portfolio compared to the index and even the watchlist. However I need two traders with a lower standard deviation of portfolio but stable returns because again of the portfolio theory nature of diversification

Trader 5: Alkimistic

1) Portfolio – Almost 100% FX, within scope 

2) Average return and loss – Excellent, average loss for the most traded asset EURUSD has a return of 36% vs. loss of 19%. 

3) Historical trades – Mostly EURUSD, however despite the above results and low average loss, looking at the historical trades, I did note average losses were high. But so did some of the profits.

4) Returns per month against the NIC index – The trader performed well, achieving +1.29%