Thought For A Day
Archives of “July 2020” month
rssTrump: Three vaccines looking really good
Pres. Trump keeps the pedal to the metal
Pres. Trump is trying to keep the pedal to the metal after getting a stronger than expected jobs report earlier in the day, by commenting on the state of the Covid vaccines.
He said:
- Three vaccines looking really good
Earlier this week, Pfizer spoke favorably about a vaccine they were developing.
Other companies who are making inroads toward a vaccine include Moderna and Inovio.
US stocks have come off session highs mainly triggered from the Florida coronavirus numbers. However, we are seeing a modest bounce off the lows. The S&P is trading at 3141.84 off the low at 3130.26. The Nasdaq is up 103 points at 10258. The low reached 10216.35. The old record intraday high reached 10221.85. The price dipped below that old high level on the correction lower, but has since rebounded back above.
Be a Dedicated Trader
- Dedication will show itself as a consistent commitment to understanding the markets and awareness of just how we are affected by it every day.
- The dedicated trader uses a journal to chronicle the market and her actions through the day.
- The trader examines the market in different ways and makes the decision to learn something new every day that makes her a better person and a better trader.
- The dedicated trader studies after hours. She will review trades, scrutinize charts, and work to discover what she had missed during the work day.
Psychological Risk Management
- If you’re out of balance, you’re going to make bad decisions, and trading the market is a decision game
- If you’re overtrading, you’re out of balance
- If you’re overcommited, you’re out of balance.
- If your dollar risk is too high, you’re out of balance.
- If you’re hung over, you’re out of balance.
- If you’re sick, you’re out of balance.
- If you need the money, you’re out of balance.
- If you make too much money, you’re out of balance.
- You’ve got to take time off. You can’t trade every day.
- Pay more attention when you account size gets bigger
- I’ve noticed over the years that when my account has been small for whatever reason, I have been really careful with it. I watch it like a hawk. When my account gets rich, I tend to fall into a habit of neglect. I’m making money. I have profits, and I’m more comfortable. I don’t keep as close an eye on it. That’s very foolish.
- Take profits out of your account
- You should spend some profits rather than letting the money stay in your account indefinitely. That’s been important to me over the years. I withdraw money from time to time and take a vacation or buy a new car. From a behaviorist’s standpoint, it gives a sense of reward. It provides conscious and subconscious motivation.
MANAGE RISK
Position Size Limits
- Trade risk limit
- Never risk more than 2%-5% of your equity on any individual trade.
- Simultaneous open positions risk limit
- The risk on all the open positions together should never exceed 10% of the account.
- The total risk exposure (to their stops) for all positions should never be more than 50% of your total capital.
- Consider correlated markets a single position
- For applying the 2-5% risk per position, consider all the correlated markets as a single position.
- Gradually build up positions
- You need to take a decent-sized (up to 1/3 of equity) position to capitalize on markets that are moving for you. Take a small position initially, and if it starts working, build up to a full weighting.
- Margin limit
- Total initial margin requirements for the contract size you trade should be no more than 15-50% of your account size. 20-30% to be more conservative. 40-50% to be more aggressive.
I dont care how smart you are, but if you violate these rules, you’re dead.
The Basic Rules:
1.) You must limit your losses. Period.
People who should have never blown out have left the game because they violated their stops.
2.) Let Your Profits Run
There’s only one way for profits to go up. That is time. We need time in our trades. Those who go in and out are destined to failure. The question is just sooner or later.
3.) You must never plunge. Ever.
You can overtrade by trading too many contracts, or trading too frequently.
You’ll need to have money management or you’ll blow up.We all read Jesse Livermore’s book, we want to plunge. When you have that “THE trade” – that’s the loser. The trade that is most comfortable, is the one that doesn’t work.You’re chasing disasters, and you’re disguising them as chasing winners.
People who should have never blown out have left the game because they violated their stops.
2.) Let Your Profits Run
There’s only one way for profits to go up. That is time. We need time in our trades. Those who go in and out are destined to failure. The question is just sooner or later.
3.) You must never plunge. Ever.
You can overtrade by trading too many contracts, or trading too frequently.
You’ll need to have money management or you’ll blow up.We all read Jesse Livermore’s book, we want to plunge. When you have that “THE trade” – that’s the loser. The trade that is most comfortable, is the one that doesn’t work.You’re chasing disasters, and you’re disguising them as chasing winners.
Dollar little changed after strong jobs report
Stocks higher. Rates higher.
The dollar is him relatively little changed after the stronger than expected US jobs reports. They were bounce bit by the higher initial claims and continuing claims for the week.
US stocks are higher with the NASDAQ up nearly 100 points in the Dow up 376 points. The S&P index is up 35.6 points currently.
US yields are higher, with the yield curve steepening. The 2 year is up 0.6 basis points to 0.164%. The 10 year is up 2.5 basis points at 0.700%. The 30 year is up the most with a gain of 3.4 basis points to 1.457%.
In the forex:
- EURUSD. The EURUSD is up a few pips after rising from 1.12852 to a high of 1.12969. The current price is trading around 1.1285
- USDJPY: The USDJPY move from 107.25 to a high of 107.557. That was near the high price from the Asian and London morning session. The pair is currently trading at 107.51 up about 26 pips from the pre-market level. The price is trading right around its 100 hour moving average at 107.496
- GBPUSD. The GBPUSD moved from 1.2509 to a high of 1.2529. We currently trade at 1.2509 – unchanged from the premarket level.
- NZDUSD: The NZD is the strongest of the major currency pairs today. It moved from 0.6515 at the time of the release to a new session high of 0.65359. We currently trade at 0.6526 up about 11 pips from the premarket level.
- USDCAD: The USDCAD has seen more of a move lower compared to the other pairs. The price traded at 1.35905 at the time of the release and move down to a low of 1.3564. The pair currently trades at 1.3569, down 21 pips from the prerelease level.
US June non-farm payrolls +4800K vs +3058K expected
June 2020 US non-farm payrolls data
- Prior was +2509K
- Unemployment rate 11.1% vs 12.5% expected
Details:
- Two month net revision +90K
- Participation rate 61.5% vs 61.2% expected
- Prior participation rate 60.8%
- Avg hourly earnings -1.2% m/m vs -0.7% exp
- Prior avg hourly earnings -1.0%
- Avg hourly earnings +5.0% y/y vs +5.3% exp
- Prior avg hourly earnings +6.7%
- Avg weekly hours 34.5 vs 34.5 exp
- Private payrolls 4767K vs +3000K exp
- Manufacturing +356K vs +438K exp
- U6 underemployment 18.0% vs 21.2% prior
The BLS said the unemployment rate would have been 1 percentage point higher if workers would have been classified correctly but even with that, it would have been better than expected. This is a very strong number and much better than anticipated.
The initial market reaction has been muted in FX but equity futures have pushed to the best levels of the day.
It’s non-farm payrolls Thursday as the US gets set for a long weekend
Rare Thursday jobs day
It’s a condensed week in the US because of a holiday and that means the June jobs report will be published at the bottom of the hour.
The market is looking for 3058K new jobs and a dip in the unemployment rate to 12.5% from 13.3%. Last month, Trump held an hour-long lecture after the jobs data to extol the rebound and if the numbers are good today, we may be hearing more of the same.
It’s not just the jobs report we’re watching for, weekly initial jobless claims (exp +1350K) are due at the same time. Later we also get the factory orders report for May.
Russia’s Novak: There’s no decision yet to extend OPEC+ oil output cuts deal
Russian energy minister, Alexander Novak, comments
- OPEC+ has shown efficiency amid current market volatility
- It would be good if we changed our decisions as little as possible for several months
- Then the market would see the situation as more stable
Russia continues to play it coy with the current agreement only to last through July at the moment. At the end of the day, it will all come down to the market reaction and OPEC+ members will play around that before committing to any further decisions.
As for June and July, I reckon one can expect better compliance to the output cuts deal in order to appease Saudi Arabia but anything beyond that remains up in the air surely.