HumbleTrader 

Though it's frustrating that I'm NOT part of these big moves, often called as 'pay days', I have to admit that my system has NO clear edge with these moves & I'm not sure about my emotional readiness. It's easy to make random trades but I know, from past experience, that I lose money consistently in this environment. I think there is a fundamental shift going on in the markets, particularly with the interest rates & currencies, which is beginning to shift capital allocation. Or, may be everyone is wrapping up before they go on summer holidays. What do I know?

That's great self awareness!

You're darn right there's a shift. The carry trade is unwinding. The Nikkei topped on the same day the Nasdaq topped, which is the same day USDJPY topped. Not a coincidence. If you want me to discuss more let me know. Or if you want to discuss love to read what you have to say.

Keep up the great work!

josh 

That's great self awareness! You're darn right there's a shift. The carry trade is unwinding. The Nikkei topped on the same day the Nasdaq topped, which is the same day USDJPY topped. Not a coincidence. If you want me to discuss more let me know. Or if you want to discuss love to read what you have to say. Keep up the great work!

I would love to hear your thoughts on these macro themes.

I admit I had a love hate relationship with fundamental analysis in the past. I did put some effort in learning about them during 'TigerTrader times'. Then I completely stopped using it because of its tendency to 'strengthen and ossify' my bias, which had disastrous consequences for my trading.

Only recently I realized that the main mistake I made was not taking technical analysis into consideration. For instance, the concept of 'carry trade unwind' is valid, from a trader's perspective, only when we see currency and indices moving. It's actionable when major supports being broken or price struggling against resistance.

In a nutshell, I was just using/abusing fundamental analysis to justify my fight against the trend. Hopefully, I have matured as a trader and no longer at risk of repeating that rookie mistake.

Your thoughts and outside links will be greatly appreciated. Thanks

HumbleTrader 

I would love to hear your thoughts on these macro themes. I admit I had a love hate relationship with fundamental analysis in the past. I did put some effort in learning about them during 'TigerTrader times'. Then I completely stopped using it because of its tendency to 'strengthen and ossify' my bias, which had disastrous consequences for my trading. Only recently I realized that the main mistake I made was not taking technical analysis into consideration. For instance, the concept of 'carry trade unwind' is valid, from a trader's perspective, only when we see currency and indices moving. It's actionable when major supports being broken or price struggling against resistance. In a nutshell, I was just using/abusing fundamental analysis to justify my fight against the trend. Hopefully, I have matured as a trader and no longer at risk of repeating that rookie mistake. Your thoughts and outside links will be greatly appreciated. Thanks

Well I haven't signed on in a while and since I wrote this, all of that is ancient history

In short, you can borrow yen for free (as they have been 0% for over a decade), convert it to USD (buying USD/JPY), and then leverage that free money into risk assets (like tech stocks). You're making money on the USDJPY and you're making money on your speculative risk assets (or treasuries, or whatever you bought). If the positive carry vehicle of USDJPY begins to decline (like when BoJ intervenes as it has done 3 times, or raises rates to 0.25%), you need to pay back some of what you borrowed depending on how leveraged you are. To do that you need to convert your risk assets to cash, and convert your USD to JPY. This reflexive cycle can is the unwind.

There can be debate about what came first to cause all of it, but fears of recession got mixed in there, really spurred on by the poor NFP print we got on Aug 2. On the morning of Aug 5 VIX was blowing up, up at 65 pre-cash. Nikkei was down 15% that day as gloom and doom talk was in abundance, with FF rate futures pricing in more than 50bps of September cuts at one time IIRC, when previously it had been only 25. Well, the VIX came back down to reality very quickly and never really got over 40 after that. It has been bleeding ever since and was printing a 15 handle today. Right now we're on day 8 of 1-timeframing higher across the board and naz is up 12% in 10 trading days. Pretty remarkable but not wholly unsurprising.

That's about it. Happy to chat about it but as you said, price is king and while having that backdrop may be good, best to always make sure we're listening to the market and not to what people say about the market.

The most helpful thing is just to know what to watch, IMO. For about a week there, JPY, treasuries, and VIX were all fantastic to watch for correlations to equities. They have still been correlated even now but the flows just aren't there to make it as meaningful.

Hey, you disappeared! Hopefully that means life and trading are so awesome you don't have time to post anything but just wanted to check in and say hi. Miss your ponderings and watching your journey.

Craig

Blue Eagle 

Hey, you disappeared! Hopefully that means life and trading are so awesome you don't have time to post anything but just wanted to check in and say hi. Miss your ponderings and watching your journey. Craig

Hi Craig

Thanks for your post. I didn't trade at all during the last 6 weeks! Not even once and that's probably a record for me but it was intentional.

I was in BC for a fixed contractual job during that time. BTW, I wanted to try and meet up with you, as we discussed early this year, but unfortunately I ended up working lots of hours. I'm talking about 100+ hrs/week (with lots of night shifts too). Hence I decided to take a clean break from trading and focus on my main job & employment income. Trading tends to have a detrimental effect on my sleep and physical activity.

I just came back home yesterday and will probably need the rest of the week to get over my jet lag. I will likely post from next week. I had a peek @ nexusfi here and there and noticed drying up of posting by regulars. Not sure what's going on here but I will try and keep it up.

Good luck with your trading. I think you also cut it down quite a bit. Hope it's going well.

October 1 2024 trading update.

I had a tentative but positive start today.

Historical stats have shown that 'Month start' tends to be bullish (>250 data points from the last 20 years) but this correlation becomes neutral once I filter for strong bull market. When I look for specific market condition like '52 weeks high', it turns out-right bearish (based on a smallish 18 sample).

This gave me some confidence to short the open. I know. It's ATH and generally stupid and stubborn traders do that but I have stats to back my idiocy.

I was expecting some chop but caught off-guard by the selling push from the word go. I grabbed partial profits @ 50% ATR and then covered fully at 100% ATR. Everything seemed to be in a rush today and It all ended a bit 'too soon'. Not complaining though

Screenshot (1746)


P.S. I decided to stick to my beloved SPY for a while as my trading discipline is dramatically better (with the added benefit of RTH trading only).
I am somewhat ambivalent about regular posting here as the forum doesn't feel the same anymore but I will try NOT to give up this month.

HumbleTrader 

October 1 2024 trading update. I was expecting some chop but caught off-guard by the selling push from the word go. I grabbed partial profits @ 50% ATR and then covered fully at 100% ATR. Everything seemed to be in a rush today and It all ended a bit 'too soon'. Not complaining though I am somewhat ambivalent about regular posting here as the forum doesn't feel the same anymore but I will try NOT to give up this month.

I was expecting some selling today too but was full on deer-in-the-headlights mode after the 1st 25 point bar down. Didn't get in until after PB...and even then wasn't aggressive enough.
Glad you grabbed a good chunk...and happy to see you back. I'm hoping that people's summer activities have limited posting and maybe they will wander back in. I for one really enjoy the camaraderie...on good days and bad.

Not giving up on Nikkei.

I had a gentle trading phase in Summer and I was getting to know the dance moves of Japanese index, early this summer. Then August happened. Extreme moves, VIX spike, huge gaps etc. due to interest rate changes and hence I stepped aside.

Now I'm testing the waters again. Another encouraging start today.

Quick reminder to myself of my 3 principal goals of day-trading.

1. Align myself with the direction of the intra-day trend.
2. Maximize my profit potential by capturing a good chunk of daily ATR. i.e 70% or more.
3. Scale in aggressively when my trade idea is working.

Scored 2/3 today.

October 2 2024 update

Historical stats were bullish today (based on the 2nd day of the mont, seasonal pattern and gap down open). However, I was hesitant to enter long from RTH open due to the fact that there is a 65% likelihood of previous day low being tested.

After contemplating placing a limit order at that strategic location, I decided against it. Instead, I bought the 1st dip, took some heat, and then bought more on strength.

My exit plan is also going well. Gap closure was a high probability outcome of >75% and I scaled out 1/2 my position for a decent profit of 50% ATR. I will leave the rest till the end of the day. I may buy again if we get a deeper pullback with a stop @ LOD. However, it may not happen during my trading window of 2.5 hours which ends by EU close.


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P.S. I will only post my SPY trading here and keep the Nikkei trading to myself. I may focus more on my fitness for the rest of the year and hence my Japanese index trading is likely to be inconsistent.

October 3 2024 Update.

My stats were neutral. However, the daily trend was low with 3 lower lows and the 20 DMA was not too far away below the opening price. Hence, I decided to short the open with the expectation of a test (which didn't happen). Since it's a 'low confidence' trade, I did NOT scale in or even bother to check the price action after the choppy opening hour. I'm glad I wasn't in front of the screen for too long. It's not good for your health during an 'inside bar' day.


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