CFTC positioning shows bets on the dollar have dropped
The Federal Reserves mid-cycle adjustment has chased out US dollar longs.
The week ahead will be an interesting one because the CFTC data is from Tuesday’s close. That was before Powell had the chance to commit to keep rates here or lower for a long time:
“I think we would need to see a really significant move up in inflation that’s persistent before we would even consider raising rates to address inflation concerns.”
The USD yield differential is still in place but it’s not as compelling as it once was, especially with the election now just a year away and all the related uncertainty.
Here’s the chart showing the drop in net USD longs, from Bloomberg:
Is this really the end of the long-term dollar bull market? You would have to believe that better global growth is coming in 2020. But with the trade war on hiatus and a potential positive finish to Brexit, is that so unthinkable?
1. Wealthy traders are patient with winning trades and enormously impatient with losing trades. Yes, I often fell prone to that. I tend to hope too much when things are going bad. I have time stops, but tend to close positions/strategies too early when having a nice gain. Too often I hold on to exit time when losing. I’m constantly working on that bad habit.
2. Wealthy traders realise that making money is more important than being right. Yes, but always hard to realise a loss.
3. Wealthy traders view technical analysis as a picture of where traders are lining up to buy and sell.Disagree, I have never found any evidence that this actually is true.
4. Before they eneter every trade they know where they will exit for either a profit or loss. Disagree, I use time stops. I have never in my testing found any value whatsoever in using targets or stop-loss.
5. They approach trade number 5 with the same conviction as the previous four losing trades. Yes, agree, but noe easy as confidence drops the more losers I have.
6. Wealthy traders use “naked” charts. Yes, I use no traditional indicators. I only use price action.
7. Wealthy traders are comfortable making decisions with incomplete information. Yes, very true. I try to make my trading as simple as possible. I avoid reading news.The only newspaper I read is The Economist. Except from that I only read football/soccer news and investment blogs on the internet. (more…)
Asked to imagine what a Wall Street share-dealing room looks like and the layman will describe a testosterone-fuelled bear pit crammed full of alpha males in brightly coloured jackets, frantically shouting out bid and offer prices.
He couldn’t be more wrong. Technological advances mean that stocks are now traded digitally on computer servers in often anonymous – but heavily guarded – buildings, generally miles away from the historic epicentres of finance, meaning the brash men in sharp suits depicted in films such as the The Wolf of Wall Street have been dethroned as the kings of finance.
Computer programmers have taken their crown thanks to the code they churn out, which is able to execute trades thousands of times faster than any human. (more…)
1. You find yourself forgetting your rules. Which during day trading is the last thing you want to happen since your profit margins are often based on smaller movements.
2. When reviewing your pre-market plays, every stock looks like a winner.
3. Shortly after opening your position you see a price target that is much higher but you have no justification for the target.
4. Trading feels stressful all of the time. From the minute you get up in the morning, until you close your last position. Instead of approaching trading with a calm head, you have a constant feeling of fighting and living on the edge.
5. You stop reviewing your trades. If someone were to ask your win/loss percentage over the last week you would have no idea; however, you would know how much money you need to make for the week.
6. You abandon limit orders and start placing more and more trades at market. Most of the times this will occur when you are trying to get into the position, because you can’t stand the idea of not being in on the winning trade.
7. You start to over trade. If you normally put on 3 trades per day, you will now find yourself placing 6 or more trades per day. This sort of behavior will run its course as the increase in trading activity while abandoning your day trading rules always points to losing money. (more…)
“I know it may sound strange to many readers, but there is an inverse relationship between analysis and trading results. More analysis or being able to make distinctions in the market’s behavior will not produce better trading results. There are many traders who find themselves caught in this exasperating loop, thinking that more or better analysis is going to give them the confidence they need to do what needs to be done to achieve success. It’s what I call a trading paradox that most traders find difficult, if not impossible to reconcile, until they realize you can’t use analysis to overcome fear of being wrong or losing money. It just doesn’t work!”
“There is a random distribution between wins and losses for any given set of variables that defines an edge. In other words, based on the past performance of your edge, you may know that out of the next 20 trades, 12 will be winners and 8 will be losers. What you don’t know is the sequence of wins and losses or how much money the market is going to make available on the winning trades. This truth makes trading a probability or numbers game. When you really believe that trading is simply a probability game, concepts like “right” and “wrong” or “win” and “lose” no longer have the same significance. As a result, your expectations will be in harmony with the possibilities.”
The less I cared about whether or not I was wrong, the clearer
things became, making it much easier to move in and out of positions,
cutting my losses short to make myself mentally available to take the next opportunity.
– Mark Douglas (more…)
Once upon a time in the late 1700′s, there were two types of sonofabitches trading the earliest version of securities in Lower Manhattan: There were the auctioneer sonofabitches and there were the merchant sonofabitches.
The auctioneers were all-powerful and totally destructive at times. They presided over trade, which took place outside under a Buttonwood Tree on Wall Street. What the auctioneers did that was most maddening to the rest of the participants in these protozoic markets was charge exorbitant commissions and allow for securities to trade in a lawless fashion, without regard for fairness of any kind.
Meanwhile, the cutthroat speculators were growing to be quite fed up with this arrangement so they did what all would-be conspirators do – they met in secret to plot an overthrow. In March of 1792, twenty four of these merchant sonofabitches snuck into the Corre’s Hotel, which occupied what is now 68 Wall Street (which has since been absorbed into 40 Wall Street, aka the Trump Building), for their clandestine sitdown.
Two months later, they hatched their scheme, signing a document called the Buttonwood Agreement (at left), named for the tree they’d been wheeling and dealing under each day. The accord meant that all twenty four signers were bound to trade securities only amongst each other, to deny entry into their clique to outsiders who’d not been accepted by the membership and to fix commissions on trades at a set amount (.25% of face value for all shares of stock or similar instrument). This banding together made these twenty four large-scale merchant sonofabitches into the de facto monopoly that controlled all trade and it sent the other sonofabitches, the auctioneers, out of business. (more…)