August 10, 2016

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2nd September: NFP Live Trading Day

When we asked attendees of the London Traders Network and the London Traders Forum what they wanted there was plenty of interest in a live trading day.

So here it is! Put Friday 2nd September in your diary for our Live Trading Day.

https://summer2016londonlivetradingday.eventbrite.com

Furthermore we’ll be able to introduce my friend and trading colleague Bryan Noble from tradernoble.com

Bryan has been a Futures Trader for 30 years, initially with Banque Nationale de Paris (now BNP Paribas) for 10 years and then Ulster Bank Markets before setting up a floor trading business in FINEX, a trading floor division of the New York Cotton Exchange, in the fledgling IFSC Dublin in 1995.

Bryan also runs the TraderNoble Platinum Service for his clients where he provides a daily commentary and intra-day trade signals for 9 major markets:

S&P, DOW, Gold, Silver, Dax, Bund, EURUSD, Dollar Index, FTSE

The plan for the day is for us to engage in a mixture of live-trading, education, socialising and some banter!

Friday 2nd September will be NFP day so the day will be in two parts:

First part is educational:

Paul will cover the importance of looking at longer term charts and how to use monthly, weekly and daily charts to support your intra-day trading.

Paul will also cover his favourite set-up for intra-day mean reversion trading.

Bryan, who is a proficient short-term trader, will educate you on his intra-day trading style:

– The importance of Bollinger Bands and Williams Index and how these two key signals influence markets.

– How to find a tradeable low in both the S&P and Dow using the McClellan Oscillator – his favoruite trading tool

– How to be able to go flat into a key event with orders above and below the market for the S&P and how to profit from this strategy.

Bryan has had huge success using this strategy over the past few years. He will do this ahead of the NFP and hopefully some of his orders will have kicked in after the data is released.

The second part of the day will be from 1pm where we will switch on the computers and look to live trade through the NFP event – in particular the post news moves.

Finally we’ll finish up with some post event drinks to discuss the results of the day.

Bryan gets his trade orders out by 0930 and the plan will be for me to trade them in front of the room and Bryan talks through his methodology, his thoughts on markets and how to handle life as a private futures trader. It will be a truly unique opportunity to watch and engage with a 30 year futures veteran, whilst also trading live.

So what’s the cost? Well the cost for day is £250 which includes the day with Bryan and myself. We’ll also feed you and buy you a well-earned pint afterwards. Furthermore there is an early-bird option for the first 14 people to respond where we have reduced the price to £180. A bargain for a full day with other traders.

If you want to know more then check out Bryans site at TraderNoble.com and even give his 7 day trial a go so you can see what he delivers every day and what we’ll be focussing on during our session together.

https://summer2016londonlivetradingday.eventbrite.com

Trade well and we look forward to seeing you on the 2nd September!

Paul

 

 

 

 

 

 

July 25, 2016

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25/07/2016 – A brief insight into Hedge Fund Recruitment

cnbc hedge fund recruitment
Here’s some insight into the world of Hedge Fund recruitment courtesy of CNBC.   In the old days the Hedge funds would often just steal the best talent working at banks. However with Banks trading floors collapsing in size and they divesting themselves of proprietary trading operations it means the pool of talent has decreased significantly. Hence why it’s interesting to see that Steve Cohen’s new fund has a 12 month trader training school as part of its set-up.
 
This is at a time when Hedge funds are not what they once where. In the old days they were proper ‘absolute-return’ funds and you could expect double (and sometimes even triple) digit growth. These days Hedge Funds has become a misnomer for all sorts of funds, many of which struggle to beat the market index. So why would a youngster want to join a fund when they could head off to an exciting tech start-up instead?
I have been fortunate enough to have done some recruitment for Hedge-Funds. It’s always a fascinating experience where you get to learn a great deal about how funds are set-up, what their expectations are….and you also see the good, the bad and the ugly in terms of candidates!

July 8, 2016

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Toffs & Toughs

In the interests of fairness I am re-blogging my friend Pearse’s view from the other side of the argument. Some of his points are valid, others I would dis-agree with……

……..but in true diplomatic style next time I am in Dublin we shall sit down over a pint of Guinness and discuss our differences like sane, rational adult men. And if that doesn’t work then we’ll go for some bare-knuckle boxing, Bloomsbury rules style, round the back of the pub! His handle-bar moustache gives him a fine head-start in this endeavour.

boxing_fencing_1890

Zohar Trading

image

Before I start it has taken me 2 weeks to calm down after the UK voted to leave Europe. My writing style is a stream of consciousness written quickly to try and capture my essence and thrust at a particular moment in time. This piece is not totally financial but hopefully it stirs some interesting ideas I apologise in advance if anyone takes offence as I am rather direct.

The above picture was taken in 1937 for 70 years it was was used by many in the UK media and beyond to try an impart the inequality and class division in the UK and especially England. 

Take a look below on the left hand side and you will see another picture also taken in 1937 but used by the Nazis as propaganda to frighten the German people. Beside it is a poster that was publicly displayed during the UK referendum…

View original post 1,198 more words

July 4, 2016

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4th July. Brexit: so what shall we do now?

Ok, I promise this is my last Brexit piece. Promise.

I have been intrigued over the last couple of weeks about the behaviour of the sullen, humiliated, defeated media. They have become convinced that the end of the world is neigh.  Furthermore the march of 40,000 pro-EU youngsters at the week-end was seen as some great cry for a re-think. I don’t think so – there were ten times more people for the anti-Iraq war march from what I remember.

The remainers have also cried foul that the Leave side told people lies whereas the remainers only told the truth. Lets just take a look at that shall we. Obama told us that we’d be at the back of the queue should we Brexit. He’s already rolled back on that. Osborne told us there’d need to be an emergency budget to deal with the terrible nature of Brexit. He’s rolled back on that as well. Tusk said there would be no favourable negotiation post-Brexit. He’s already rolled back on that. Juncker said the UK would be punished for Brexit. He’s already kinda rolled back on that (or basically was told by Merkel et al to wind his neck in!)

The truth is that both sides did whatever it took to win. Neither side covered themselves in glory. But the voters ended up seeing through all the lies.

I find it fascinating that people have been arguing for an over-turn of the democratic choice of the nation. I find it fascinating that the Remain side had all the power, money, media and establishment figures behind them……and they still lost!  Furthermore more people voted for Brexit than for anything else in the history of British democracy!

I figured that I should end with a piece on what happens next? As I have been a vocal supporter of Brexit and that a lot of the recriminations from the Remainers has been about the lack of a clear plan on what to do I thought I would give my insight into what I would do.  Have a read and let me know what you think!

 

  1. NHS – now I know the Vote Leave side of the campaign made claims about directing the EU money towards the NHS. Now don’t all try to lynch me when I suggest we don’t do that!  Why not? They way I see it is that once I’ve spent my £180 mllion a week on the NHS that’s it, its spent. Whereas if I use that money to re-energise our country’s business practices that will help us grow and prosper, then the increase in tax-revenues will be enough to direct towards the NHS (and other areas). I hope that makes sense?
  2. Corporation Tax – well it appears that Osborn has stolen my thunder and called for a reduction to 15% in an effort to stop companies leaving and make us still attractive for FDI.  I was going to suggest going one further and reduce it to  a flat-rate 10% (lower than Ireland’s 12.5%) as an aggressive means to protect the tax-base and send the message to the world that we are pro-business.  Now I know that there’ll be some sucking of teeth from people but my view is I’d sooner have 10% of something than 100% of nothing. If a company still wants to leave despite a 10% tax-rate then let them go.
  3. Business Rates – Whilst corporation tax may help big business and maintain/create FDI we have to take notice of many of the reasons for Brexit vote in under-performing parts of the country.  If you’re in a part of the country that you feel has lost out due to globalisation or lack of funding then what did you have to lose by voting out?  Big companies may provide nice PR, but the reality is that real growth comes from the SME / start-up sector. To help with this I would  use the money to back-fill councils so that they can remove business rates from small-businesses. Imagine if every SME in the country could afford to hire 1-2 extra people from not having to pay business rates? That’s the kind of growth we need.
  4. Red-Tape Free areas. One of the hassles for SME and v small-businesses is the amount of red-tape required for operation. Furthermore if you do apply for grants there are a large number of hoops to jump through. Invariably most small businesses are too busy on their day-to-day survival to spend the time and energy to learn how to ‘play’ the system. In those under-performing parts of the country I would look to establish free-business zones that would provide subsidised offices/plants along with free business rates for companies setting up there. You provide the infrastructure in terms of HR/IT/Legal/Accountancy/Exporting support and just let them get on with growing and building a viable business.
  5. R&D: Lets face it – our past as a great manufacturer is not coming back. The days of heavy industry are probably behind us. Where we do have an edge is in innovation and R&D. As the world pivots towards the east in terms of capital and initiative it becomes ever-more important for us to find and develop our competitive edges. One of those is R&D (across all industry spaces) and that is something that should be encouraged. We have great talent in this country – let’s do all we can to unleash it!
  6. Do away with visas for all foreign students from Masters level education upwards. To help with the point above I would also do away with visa’s for students who wish to study in the UK from post-graduate level and above. Why? At present if your from the EU you can come here and study and live. Whereas from other non-EU nations you can study here, but as a general rule you only have  2 year visa post graduation. I would want to remove that. We want to attract the greatest brains from around the globe and encourage them to study here, and then stay, contribute and develop our R&D capabilities further. By doing it from the post-grad level you encourage those who’ve already demonstrated some application to education.
  7. British Citizenship for existing immigrants. I notice today that German politicians have considered offering German nationality to any British people living in Germany. Well how about we do the same and offer anyone living in the UK to have British citizen-ship? If you’ve come here and made a life here and you’re working and contributing then why not allow citizen-ship for those people? The truth is that immigration is going to happen and as I said in my very first pre-Brexit vote piece, I have no issue with anyone who wants to come here and make a better life for themselves. In fact I welcome that. (Please don’t believe all the hype from a sullen, defeated, biased media that all Brexit-eers are racist bigots. Nothing could be further from the truth.) If you were here before 23rd June and you wish to stay and make a life here then you’ll be open to applying for British Citizen-ship
  8. Re-engage with the Commonwealth. No, this doesn’t mean that I think that our commonwealth countries will just welcome us back with open arms. Nor is it me wanting to re-create the British Empire. Nothing of the sort. But its a great starting point for us to pivot away from a lethargic EU and towards a wider, more energised, global stage. It’s a starting place for us to re-energise our relationships with the entire world, rather than the narrow niche of the EU.
  9. Get the skandies on-board. I would also start to re-engage with Norway, Sweden, Denmark and Iceland. We have long historical links with these nations. They are also euro-skeptic as well. Then get Canada, Australia & New Zealand involved – they are also part of the 5 Eyes Agreement (where a good deal of our security and intel comes from). I said in one of my pre-Brexit pieces that I’d look at a North Atlantic Free Trading Area between Canada, UK, Iceland, Greenland, Norway, Sweden & Denmark. We have historical maritime trading links.

I think that’s enough for starters isn’t it? I have no doubt there will be plenty of people will read these and many will think “Pauls really lost it now – he doesn’t have a clue” and that’s fair enough. If people have better ideas than I’d be delighted to hear them. Now is the chance to grasp the nettle, in order to really re-shape our country for the 21st Century.

My only comment on the political situation is this. The political classes are tearing themselves apart because the world has changed – and they need to change to survive or die. But this is all being done without riots, guns or police brutality – this is a very British revolution!  Furthermore it pleases me that of all the 5 candidates for the Tory leadership none are old-Etonians – the first time ever. Furthermore all of them spent some time at state-school. Is that not something to cherish and embrace? Is that not a sign of a change? Something to think about.

All thoughts and suggestions gratefully welcomed.

Now back to the markets. Trade well everyone!

Paul

 

July 2, 2016

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1st July Post Brexit Views:Losers

So in the previous posts I looked at what happened, followed by possible winners.

If there are winners then there’s got to be losers. So lets take a look at some of them.

Boris Johnson

Brute Johnson

It’s all gone ‘a bit Pete Tong’ for old Boris hasn’t it? In what should be the crowning achievement of his political career, namely winning a referendum and being a shoo-in for Prime Minister to political has-been within the space of a week!

To be fair one of the things I did get right was predicting that Boris would not be PM despite other protestations. Remember that 42% of the Tory party voted to remain and within that group of Tory MP’s I always thought there was enough clout to ensure that Brutus Johnson would never be PM. There will be lots of people just within the Tory Party that would want to knife him for all the trouble he’s caused. (Interestingly enough he actually got knifed from someone close to him…oh the irony for Brutus .)

Whilst I was never fussed about him one way or another as PM I do feel that he would have probably led a good negotiation with our European partners. For all his commentary, he was always pro-European, just anti-EU. But it looks like he wasn’t man enough for the job.

To be fair Boris is very good at playing the hand he gets dealt and will undoubtedly come back in a few years to have another crack at PM, so watch this space.

George Osborne

george osborne

George “Chumpy” Osborne has played this poorly from Day 1. Instead of using it as an opportunity to be statesman-like and project an image of heir-apparent to DC, he’s just ended up looking like a School Prefect at a minor school. You know, the kind of Prefect that got the job not because of any talent, but because no-one else wanted to do it and he thought it would make him popular.

He was a key architect of ‘Project Fear’ and it back-fired on him spectacularly. His call for a harsh emergency budget if the country voted Leave was an example of this, when he rolled back on that very quickly. Furthermore he went missing for 3 days when the country needed to see him front-and-centre as Chancellor. And you just know he was at home underneath his duvet crying like a spoilt brat.

I suspect he his wheedling his way around the back-rooms of power trying to build new relationships to provide him with some kind of graceful move. (I bet he’ll be part of the power behind Teresa May…god help us all!)

David Cameron (DC)

cameron sad

 

I had often briefed that I felt that DC would “Win the battle, but lose the war” if the Bremain vote was not a strong enough victory. In the end he lost the skirmish, the battle, the war, and probably his legacy which will be undoubtedly tarnished by this referendum. here’s not really much to say here is there? He screwed it: big-time.

Jean Claude Juncker

juncker-fun

I have found it interesting that those unelected members of the EU (Like Juncker) have been the ones most belligerent in their rhetoric about making sure there are consequences for the Brexit Vote. Whereas those national members of parliament who have to manage domestic elections and economies have been much more conciliatory in their tone.  That tells you all you need to know about this man and his like. It is his type that Vote Leave was all against.

He instigated a Presidential ban on any other European member speaking with Britain, such is his need to control. But all we’ve seen is that it’s clearly shown were the real power lies in Europe, and it’s not at his door, but that of Angela Merkel (as if we didn’t really know that anyway!)

European Indices and Banking Sector

I mentioned in one of my other posts (and on some Facebook pages) that whilst GBP and FTSE were hit hard, so were our European cousins. In fact some of them were hit even harder than the UK. In particular the Italian and Spanish Bourses were hit hard, as were European Banks.

There’s plenty I could use but here’s the Italian Mib and Spanish Ibex charts

Ita40Sep16Daily jul 16Esp35Jl16Daily jul 16

The Italians had to bail-in Italian banks to he tune of E40bn earlier in the week. And this goes to the heart of it all. The EU consistently favours large corporations over SME’s and the people.  In a choice between Greece and its people and the French & German (and some UK) bondholders the EU chose to save the German banks over the Greek people. They have consistently failed to hold the European banks to account and as such this has done much to cause division within Europe.

Interestingly the Spanish elections of last Sunday night allowed the right-wing party un Rajoy to increase his position to one strong enough to create a government.  The consequence of this is that there’ll be no SPEXIT (not that it really was a player) but that also as part of Rajoys speech he made it very clear that there must be no separate EU deal for Scotland. Hard Cheese Nicola.

The Financial Times

How are they a loser? Well it’s purely in my eyes that’s all. (Which I understand counts for little.) I have always been a big fan of the FT and always tell my students to ensure they read the FT weekend to give themselves a good big picture view of what’s going on in the world of finance and markets. I’ve also enjoyed that they were impartial and agnostic-politically.

However their coverage of the Brexit vote was clearly biased towards the Bremain side. Instead of standing apart from the media, they just showed their true colours in the sense that they were clearly in the back pocket of the powers that be. Furthermore when they were wrong instead of admitting their error and providing reasoned insight into the way forward, they almost doubled-down on their bet by attacking the Leave / pro-Brexit side further. Very disappointing overall. I had hoped for better from them. But I suppose he people have lost trust in all the old pillars of society haven’t they?

George Soros (kind of)

Georgie boy is here because of his long GBP position pre-vote. Post the murder of Jo Cox MP there was a huge wall of money that flowed into GBP (as discussed in one of my other posts.) I had described it as the relief-rally that I had expected on Friday 24th, happening a week early. And it was some rally. Right up until it turned on its head at £1.50.  Thing is when you’re trading in the size that George was (I presume) then you can’t just turn on a six-pence. So I am interested to see how he truly fared on Referendum night.

However any losses he took on Sterling were probably happily covered by him also being short European banks (a subject I ve covered elsewhere). I only found out about that earlier this week. Nice to see that the big man himself had the same ideas myself about where the weakness would be.

So what other losers have I missed out on?  Surely there’s many more. Any thoughts gratefully accepted.

In the last piece I’ll talk about my own views that we could prosper from the Brexit vote.

Trade well,

Paul

 

 

 

 

 

July 1, 2016

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30th June Post Brexit Views Part 2: Possible Winners

Hello traders,

I hope you’re enjoying watching history in action before our very eyes?  In my first piece I gave a little bit of background about what happened in the run up to the vote and during the overnight count.

We’ve had a few days to watch and listen to whats happened. Lets take a look at some possible winners.

Winners:

FTSE100 – One idea to look at pre-vote was an inverse head-and-shoulders pattern on the FTSE100. After the events of Friday I thought that may not be a player….but so far it is. Take a look.

UK100Sep16Weekly jun 16 inverse h and s

I’d said that a weekly close and hold above 6400 was bullish. In the last few days we’ve had a strong resurgence in the FTSE 100. Las Friday we opened aprrox 5720 and by today we were getting toward 6520 – an 800 point move back from the lows to above the recent highs. That’s quite some move isn’t it?  All helped by our next winner: Mark Carney

Mark Carneycarney and pound

One guy who has done well from this shambles (reputationally) is your man Carney. Before the vote I had labelled him, along with Osborn and Corbyn, as the trio of ‘unreliable boyfriends’ due to his behaviour – he was clearly in the pocket of Osborne.

However fairs, fair, since the vote he’s done well. His speech on Friday morning struck the right tone at the right time and helped stop any further descent into madness. Will that be enough to save his job under a new government. I think so. Just.  He’s also clearly got atough job ahead and his comment today on interest rate cuts did wonders for the FTSE (see above). I just wondered exactly where he’ll find further interest rate cuts when we’re already at historic lows?

Nigel Farage

farage and juncker

Two Wonderful And Talented Schoolboys

“Revenge is a dish best served cold” is a Klingon proverb I first learnt in Star Trek2: The wrath of Khan

https://youtu.be/r4qMBO_C2zM

Running u to the event when it looked like a sure-fire victory for Bremain I presented that was a Bremain vote a done deal then it would be curtain for Nigel. And that by end of play on Friday he’d be finished up.

Well, the vote has given him one last hurrah.  To be fair to him whenever any of the main politicalplayers were asked about the ramifications for trade, enterprise and commerce he spoke the most sense out of any of the players from any party. Clearly his background had provided him with some good insight.

However Nigel’s biggest failing is Nigel himself. Having secured the vote he’s spent his entire political career fighting for he had the chance to go to Brussels yesterday and act magnanimous and statesman-like. Such behaviour would have endeared him to new votes and maybe given him a chance at being at the post Brexit table. Instead he just insulted his European colleagues and looked like a dick.  If there’s one thing Ive learnt about negotiations is that you don’t want to start by insulting the other side of the table. Nice work, Nigel. If he’s smart he’ll leave the party now and walk-away. Somehow I suspect he wont.

Dollar Index

USDIndSep16Weekly jun 16

The Dollar Index had one of its best days for a long time last Friday as a wall of money flew into the Dollar (Probably to buy US Treasuries). Whether Yellen would see a rise in the dollar as a good thing is a moot point. Anyway its gone from the 93 support level up north of 96.

Euro

EURUSDWeekly Jun 16

In the same way that we’ve seen Dollar Strength, we’ve also seen Euro weakness (against everything apart from the GBP not surprisingly).  Remember the Euro is set-up to help Germany’s export economy – so every drop in the Euro brings a smile to face of German Exporters. Whilst the uncertainty within Europe may alarm some – it probably leads to cheers at German Automotive manufacturers!

Chinese Yuan

USDCNHDaily Jun 2016

Unbeknownst to many last Friday the Chinese Central Bank used the market turmoil to slide the trading bracket of the Yuan, effectively devaluing their currency further and shifting their problems to the rest of the world.

“The Chinese – a great bunch of lads.”

Ireland

iseq jun 2016

I’ve included Ireland in the winners column…but to be honest they’re only a ‘perhaps’.

After looking at the chart of the ISEQ above you might be asking why are they even in the winners column at all? Admittedly they got hit hard in the sell off (losing about 1000 points on the Friday.)

So why could they perhaps be a winner after all that? Well when the Brexit happens if Ireland is smart they should re-position themselves as the only English-speaking nation in the EU. They have a lax tax regime (though whether the French and Germans, and even the Americans, will let them continue with them) which is attractive to major corporations. They also have a well educated population. And their national stereotype is of being friendly drunks that everyone likes.

What is required is a group of visionary men and women at the highest levels of Ireland to help re-position themselves for a possible glowing future. The opportunity is there – the question is, will they grasp it?

The bookies

All the money was on the Bremain side….so I suspect they cleaned up nicely on Friday!

Democracy

Just a short note to claim Democracy as one of the winners. Regardless of your view or your side – it’s been a fascinating insight into Democracy in action. Not only was the vote a bit of a two-fingered salute to the Westminster & Brussels elite, but its also been done with out any military coup – just people expressing their democratic right. Part of you has to enjoy that?

Originally this post was going to be about winners and losers…but the post is long enough just covering winners so I will cover the losers separately.

So who else was a winner from all these shenanigans? Who else do you think won from the immediate event? And who will win further down the line? I’d love to hear you views.

Trade well,

Paul

 

 

June 28, 2016

6 Comments

28th June: Post Brexit Vote views Part 1

Hello Traders,

Well that’s been quite an eventful last two weeks in markets hasn’t it?  For those new to trading I’m sure it seemed quite terrifying. For those of us who’ve traded for a while you realise something like this happens every so often – it’s just part of the gig.

So what actually happened? Where was I right and were was I drastically wrong? I was always a Vote Leave (VL) person…….who thought that the VL group would never ever win. The money and power behind Remain would be enough to bring home a Bremain vote.

Yes its true that for 2 weeks early in June, the VL group had their noses ahead – however there was still a significant number of undecided voters (9-13%) who it was felt would come down on the side of Remain. Despite having their noses in front, after the tragic events of 16th June with the murder of Jo Cox MP I sat and watched a flood of money pour into GBP. It seemed a very clear sign that the Remain camp would win. In fact I changed all of my presentations for the final week to state that it would be a Bremain vote and now we were just waiting to see what the margin of victory was in order to determine whether Cameron would stay or go.

You can see below the fantastic move we saw from lows of approx. 1.4050 upto 1.4950-ish over the days from her murder up to the vote. An amazing move that was replicated across all the GBP pairs in one way or another.

GBPUSDH1

Further more the Bookies and Betting Markets had shown a huge swing back towards the Remain camp (despite the polls the betting markets had never really followed through).

20160621 EU Ref pricing

The chart above is courtesy of IG markets who had the price at 75/25 towards remain (and it even went as high as 90/10 after the poling booths closed). During last years general election the polls had been massively wrong but the betting markets had been very accurate about the result. As a general rule if you follow the money you predict the future….and it was clear from both the financial markets and the betting markets that Remain was going to win.

On the Tuesday before the event I delivered a presentation in Dublin and was a confident that a Bremain win was in the bag (despite my own personal views). One of the audience told me that Paddy Power were offering great odds on a Remain win with a vote of +55 which I thought was a good punt. And the audience agreed with me.

In the run up to the vote I was delivering presentations all over the UK and Europe and clearly I felt that Bremain would win, and if so the first target would be 1.50, with a possible overshoot to 1.51-1.52 on GBPUSD.

So despite being an Out-er I clearly felt that Bremain was going to be the winning side, and clearly I was wrong in my call. For which I apologise. In my defence the major players were also predicting a Bremain vote: 10 Downing Street, Boris Johnson, Nigel Farage, George Soros, and most financial institutions.

Well I was right that price did hit 1.50……and went no further!  I was on a trading floor on the evening of the results. I sat with my German colleague and watched price shoot-up to the 1.50 area, where price faked-out and printed a nice little head and shoulders pattern on the 5 minute chart. We laughed about how that was a great little sell signal……..but of course price was only going higher so it would be foolish to short there. Sigh. It might be sometime before we see 1.50 again!

GBPUSDM5 Post Brexit fall

Overnight as news came in it was quite clear that a vote of seismic proportions was occurring. And with that GBP fell…and did it fall! From 1.50 down to approx. 1.3226.

Prices have bottomed out (for the time being) and are today holding around 1.33-1.34. There will undoubtedly be further turmoil down the road -but for the moment I am calm.

If you got part of that short then congratulations – I admit I was flat going into the results as I felt (regardless of the result) that it would be far too volatile and spreads would be all over the place, along with fills, executions and stop-losses!

In my defence even George Soros was long Sterling due to his view that Remain would win and Sterling would strengthen. Interestingly as the result became clear and was finally declared we could start to see the shifts within markets as they sold off.

One good call I had made to people was that I had said that if a leave vote was successful then you wanted to be short GBPJPY and GBPCHF and long Gold – all as safe-haven plays.

One other element was shorting European Banks – as they may have felt the most pain from an event like this. And that has worked out true. In particular I talked about Deutsche Bank (NYSE:DB) who have lost 40% this year, are at the lowest since 2000

Detustche Banks Daily Chart

If you look at any of the Big European Banks they all got slaughtered since Friday morning, which tells us a lot about the underlying problems Europe faces. It may well be that Europe fares just as badly or worse than the UK as part of this divorce?  In part 2 I shall focus on the political points and what are my own feelings about the future.

For those of you still in shock: the world still turns, the sun still rises and sets, and Liverpool will probably never win a Premier League. These are the things you can take comfort and solace in during turbulent times.

Trade well,

Paul

 

 

June 8, 2016

4 Comments

8th June: GBP Update

Well fellow traders, just over a couple of weeks till the EU Referendum here in the UK. (You can read my own rantings about the Brexit vote here.)

So I thought I’d do a quick little Sterling update. During my last piece I mentioned that perhaps the markets had already priced in a Remain victory as GBP was strengthening across the board.

So a week or two on what’s happened?

Well we’ve now had two weeks of Polls that both show the Brexit/Leave vote winning.  That has been enough to make GBP tumble and also get the politicians backing the Remain vote into a tizzy and start trying to bring out the big guns.

We also had the Cameron vs Farage ‘debate’ last night. Only it wasn’t a debate as they each appeared for 30 minutes on their own. What was all that about? Furthermore did we really learn anything new from that spectacle?

So what are the markets telling us?

20160608 GBP Update.png

Well actually this week the GBP has been all over the place. The GBP strength we saw a few weeks back has dissipated as the polls have shown the Leave vote winning.

What can we read into this?

Well my own view is that this is just the nerves and shakes before the event. Even though I am a confirmed Brexiter I still believe the Remain vote will win. I read that a big punter went and put down £60,000 on the Remain vote at 2/5 (I think that means he’ll win approx. £24,000 if the Remain vote wins.)

Interestingly looking at the recent COT data shows that the Non-Commercials (the large speculators) are still predominantly net-short GBP. I would have expected them to be loading up on long GBP to make the most of any bounce in GBP should the Remain vote win. Is their net-short position telling us something interesting? Or are they just completely wrong? (Its happened before). Alternatively maybe they’re still holding shorts waiting the perfect chance to load up on longs just before the event?  Lets see what happens. Any alternate thoughts or insight is welcome.

If you are trading GBP in the run up to the event then please watch your positions like a hawk. I know that people love to talk about how great it is to have ‘volatility’ in the market….but, just like leverage, its only great when it’s on your side! When you’re on the wrong side of volatility then it can be pretty hard hitting and sobering.

In these last two weeks I expect to see lots of volatility within GBP – every time some politician or world figure (for whichever side) comes on the TV and says something there’ll be some sort of reaction. That just opens the flood gates for GBP to shoot all over the place.

Don’t believe me? Well just take a look at the 15 min charts of GBP yesterday:

20160607 GBP 15 minue fat finger

Officially this is now being putdown to a ‘fat-finger’ mistake by someone. Hmmmmm. Anyway the GBP moved between 150 – 300 pip move in a 15 minute window across all the majors. Now that is volatile. Great if it was on your side. Terrifying if you were on the other side of it!!

SO keep your powder dry and expect a rough ride these next couple of weeks! You’ve been warned.

 

May 26, 2016

6 Comments

“Like a re-run of the English Civil War…without the muskets.” Pauls Brexit Rantings

brexit picture.jpg

Every so often reader I tend to post a blog on my own thoughts about a certain subject matter. Once again I ask for your indulgence as I share my views/treatise/ rant (delete as appropriate) . This is what happens when you leave Paul without mobile or internet coverage for the best part of a week!

 

This time it’s on the Brexit referendum that the UK faces on the 23rd June. Yes I know you’re probably already bored to the back-teeth of Brexit commentary, so I won’t hold it against you if you just choose to ignore reading my piece and go the pub instead.
I started writing this a couple of Fridays ago having attended the Bloomberg Brexit Event in Dublin. Here I’d listened to the Irish Taoiseach Enda Kenny claim that he didn’t want to lecture the British on their Brexit decision…….and then proceeded to lecture us on how a Brexit vote would be terrible. For Ireland that is. Which it might be – and then again it might not.

 
Undoubtedly the Irish find themselves in a difficult position – as Enda Kenny reminded us, presently there is 1.2 billion euros of trade done every week between Ireland and the UK. Approximately e65 Billion a year in business. There are 200,000 jobs on each side of the Irish sea directly linked with the trade between Ireland and the UK. The joke in Ireland was that if Brexit happens then the immigrant camps of Calais will transport themselves to Dundalk! Personally I think this is highly unlikely (though some of you smart-alec’s may remark that parts of Dundalk already look like an immigrant camp. That may be your view reader, I couldn’t possibly comment.)

 
What do I think? Well I have been always quite openly in favour of Brexit. However for choosing Brexit I have been labelled so far this year:

 
– An idiot
– A racist
– A little Englander / an imperialist (supposedly wanting to return to a British Empire)
– Out of touch with modern politics / world

 
Well let me dispute some of those points. Yes I suppose I have been an idiot at times of my life – but then I challenge anyone to say that they have never been an idiot or made an idiotic decision in their life? With regards to my Brexit vote the people who tell me I’m an idiot………are all the same CEO’s Politicians, Civil-Servants, Executives etc. who have all done very well out of being part of the EU! So of course they think that any idea that promises to up-set the apple cart and unsettle their easy way of life is the idea of an idiot! Brexit sparks all manner of cognitive dissonance in these people (if you don’t know what that is, and want to know more then go and read Steve Goldstein’s piece in his ever-brilliant blog.)

 
A racist? How? I am from an immigrant family (my mother is Irish) and I know that the stats say that economically that the UK has been better off for immigration. I tend to agree with that and I think economic migration is an integral part of the human-condition. If your conditions are poor you get up off your arse and go and make a new life for yourself somewhere else. That concept is as old as we’ve roamed the earth. I don’t believe that a Brexit vote will provide the kind of control of borders that the quacks think it will.

 
An imperialist aching for a return of the British Empire? Oh, give over. If anything it’s the Remain crowd who are the imperialists wanting to believe in the might of Empire, that being the EU.

 
When I hear the likes of: Cameron – Obama – Carney – Osborne – Lagarde – Merkel – Juncker – Enda Kenny – and others all telling us that Brexit would be a terrible event for the British People it gets my dander up. Just that rogues gallery list of names telling me to stay in the EU is enough to make me want to vote for Brexit!

 
(I do admit that the Brexit crowd are hardly full of illustrious names and leadership either. I’m not disputing that whatsoever.)

 
Am I out of touch with modern politics/world? Well I suppose in a way I am. If refusing to listen to the utter tripe that people of all parties spout (both in the UK & Ireland) and being rather fed-up of all this political tom-foolery means I am out of touch with modern politics then yes, I am proudly out of touch with modern politics.

 
But there’s more: Michael O’Leary (of RyanAir Fame) was also speaking at the Brexit event – and to be fair to him he was, for the most part, an engaging and interesting speaker – who as you’d expect blatantly pushed his own agenda. He said the only argument was economics and from an economic point of view the argument was clearly won by the Remain crowd. And that nothing else mattered.

 
Here is where I would disagree and we start to get towards my own reasons for Brexit. There’s more to it than economics – Michael O’Leary has led a very sheltered, cosseted life without ever having to really work too hard for anything. For him to say the only argument is economics clearly shows that.

 
In 1992 I was a serving Officer in the RAF and was based in Italy / Balkans during the break-up, civil-war and ethnic cleansing in the former Yugoslavia. I watched as EU ministers, sat around, talked a good game, wrung their hands and refused to do anything to help stop the atrocities going on in that god-forsaken part of the world. It was left to the US and the UK to step-in and get the job done.

 
In 1999 during the war in Kosovo we saw some of our European ‘Allies’ chicken out during the first day of the war and run-away. It was left to the US and UK to get the job done.

 
In Libya we saw the EU wring their hands and refuse to do anything, until they got US backing…apart from the French……who were desperate to secure export customers for their Rafale Fighters, so they sent them in first to make themselves look good (and which Egypt subsequently bought!)

 
In 2009 we saw the EU ferment trouble in Ukraine leading to a bloody civil-war which caused the break-up of the country and empowered Putin to annex the Crimea. At which point the EU ran away and hid behind Obama and asked the US to sort it out.

 
Recently we’ve seen the wholly underwhelming way with which the EU has dealt with the Syrian Civil war and the wave of immigration into Europe.

 
The great argument of the Remain crowd is that the EU has brought peace to Europe for the last 70 years. I can assure you that is not the case. It is NATO that has guaranteed the relative peace.

 
Personally I believe the European Union to be a opaque, un-democratic, morally-bankrupt, paper-tiger.

 
Interestingly Enda Kenny was quick to stress that Ireland was once again the fastest growing economy in Europe – without being able to really provide the details of why. Well I shall tell you why – it’s because the US and UK economy weathered the recession the best and recovered the fastest. The overspill from the US & UK is what raised Ireland from its post-crash gloom and doom. I’ve said it before – Ireland is an Atlantic Nation, not a continental European nation. It has more in common historically, culturally, economically with the US & UK rather than main land Europe.

 
My own view is that why would we want to couple ourselves to the slowest growing economic bloc in the world? That also has the largest youth unemployment? And seems to not really care about re-structuring itself to deal with those problems?

 
Anyway despite all my ranting the truth is that whilst I will vote for Brexit I don’t actually think it will happen. Why?

 
1. This week’s polls have both the remain and leave crowd knocking about the 41% vote each (give or take). The undecided is approx. 13%. Of those 13% the greatest majority of those are female votes – who are more likely to shun the perceived risk of Brexit and vote for the status-quo to remain.

 
2. I actually think that there are so many forces and players doing well out of the present status quo that it simply won’t be allowed to happen. Look at the list of names I mentioned earlier in my piece – they all have a huge vested interest in the remain vote and maintaining the status quo. I simply do not believe that we’ll be allowed to vote out, and they will do anything to prevent it. And I mean anything.

 
So what do the markets tell us? Let’s start with a look at Sterling:

20160526 GBP Snapshot

From December we had weakness in the GBP (which I talked about at the end of last year). However since April (and Obama’s comments) we’ve seen an increase in GBP strength against everyone – including the recently strong USD & JPY. Even my own STAM is showing increasing Strength. Is this because the markets have already priced in a Remain vote? What do the readers think?

 
My own view is that in the unlikely event of a Brexit vote the GBP would drop – but would that be a bad thing? Yes it would make your holidays more expensive – so you’ll have to take a staycation instead. And it will also mean that we’ll become a more attractive venue for tourists (is that a bad thing?) People often refer to the drop in Sterling when the ERM Black Wednesday event happened – what they fail to remember is that set the conditions for the boom of the 90’s in the UK. Why could that not happen again? We’re a resilient people, we’ve lived through worse – we have enough talent in this country to forge our own way.

 
Furthermore I don’t believe it’s in our European neighbours best interest to hit us with tariffs – the UK is still too attractive and profitable an export market for them.

 
Let’s have a look at the FTSE: It’s not very impressive is it? No, it’s doesn’t seem to fill you with any confidence does it? Now I know that the FTSE 100 is not exactly a fair representation of the UK economy – however it’s still used as such a yard stick.

20150526 FTSE snapshot

My own view is that 6000 is the line in the sand. If that breaks then we’re due a continued period beneath that number.

 
So my views continue to be that Brexit is the best vote for ourselves – but I don’t think it will happen. So I am voting out, but trading for in. (Who says that traders can be too emotionally attached to their positions!) That is what I think will happen….but I’d be delighted if I’m wrong and there is a Brexit!

 
My own views are formed off the back of democracy rather than pure economics. By rejecting the EU, I am not stating some democratic supremacy insinuating that UK politicians are better – far from it. They’re mostly a shower of rubbish. But they are our shower of rubbish. If I don’t like them I can a) vote them out or b) I know where they live (should you wish to take an alternative, more robust, route towards power and decision-making!)

 

 

Cameron showed very clearly how little influence we had within the EU with his miserable re-negotiating stunt. It was a waste of time and did him more harm than good.
In my utopian view of a perfect future there would be the creation of a new trading block: NATO – The North Atlantic Trading Organisation (yeah I know I’m stealing the name) but it would be a trading bloc built on our historical maritime trading links: Canada, The US, Ireland, The UK and the Skandies.

 
“If Britain must choose between Europe and the open sea, it must always choose the open sea.” Winston Churchill

 
I’d like to think that I have added in some way to the debate, the truth is it’s just an old man ranting against, what appears to be, an inevitable step towards a ‘supposedly’ safer, more peaceful, and undoubtedly blander way of life. If you’ve read all the way down to this part then I truly admire your determination (or should that be foolishness?)

 
Trade well, and please let me know your thoughts regardless of your own position – there’ll be no remain-bashing here.  I agree with John Redwood when he said this vote is more important than a general election and is also a re-run of the English Civil-War….without the muskets! (We’ll save them for afterwards!) Therefor I welcome all views and thoughts.

 

May 23, 2016

2 Comments

Reminiscenes, and the value of volunteering

LCD header.PNG

https://www.leonardcheshire.org/about-us/history

Fellow Trader, please indulge me the first few paragraphs about history and my own life – I assure you there is a point and a relevance to traders.

Yesterday, I was reading the link above about it being the 68th anniversary of the beginnings of the Leonard Cheshire Disability Charity. So what would that mean to me or traders in general?

Leonard Cheshire

 

The RAF Bomber Command Legend Group Captain Leonard Cheshire VC passed away the day after I graduated from the RAF College Cranwell in 1992. (His RAF Career is a fascinating Boys-Own read in itself.) A few weeks later I was part of his memorial service at Lincoln Cathedral and escorted his wife, Sue Ryder (who also built her own charity). In attendance was a veritable smorgasbord of the great and the good from society. And me, a young 19 year old Pilot Officer.

Years later when I was looking at volunteering and learning about how Charities worked (with the aim of building my own charitable hedge fund) I was struggling to decide which Charity/Cause to work with. There are a lot of worthy causes out there all clamouring for your time and money. One morning I opened the paper and there was a double page spread on Leonard Cheshire, his RAF career, and how post-war he dedicated his life to helping those in need, and created and built the country’s largest charity supporting mental and physical disability. It made my decision easy and I spent many happy years volunteering at their Battersea home. Mental and physical disability in adults is not a ‘sexy’ cause for people and resources, yet I was always amazed at the courage, compassion and fortitude of the clients and staff of the Leonard Cheshire facilities.

If you’re ever looking for a cause to support then I can heartily recommend their work.

So of what relevance is all that to traders? Well at the time I was an active intra-day trader and was spending 10-15 hours a day, every day, working on becoming a world-class trader. It’s very easy to go down that route and focus on trading to the detriment of everything else, and I realised that was happening to me.

As mentioned above I wanted to learn how charities really worked and wanted to do some volunteering. So I used to give up every Wednesday afternoon and go and volunteer at their centre in Battersea.

As traders, especially private traders we sometimes forget that we are in a particularly privileged position – we have autonomy, we can come and go as we please, we dress how we like and we have no real commute. We can work the hours we want, and we answer to no-one. And yet I hear many traders grumbling and complaining about their lot. I used to be the same. Until I started volunteering.

Often I would turn up at the centre feeling a bit grumpy and miserable that my early morning trades for that day (or week) had not been profitable and I was being a grouch. However once I got to the centre I realised that my trading challenges were not really of any consequence whatsoever – I had no reason to be grumpy. Here I was surrounded by people who had real challenges of mental and physical disability to deal with every-day, and yet they always met me with a smile and were always pleased to see me. I would catch myself saying to myself “Ahh Paul you big sh*t, you have no reason to be grumpy, so what that you lost 25 pips on your EURJPY trade this morning, it means nothing, take a  look around and see that you’re blessed, snap out of yourself and get with the program!”  

The users of the centre didn’t know a thing about financial markets – and they didn’t care that EURUSD was rising strongly ( for the younger readers that’s what used to happen years ago pre-GFC, Euro strength and dollar weakness).  They simply appreciated the mere fact that I would give my time to them and work with them on helping solve their every-day challenges.  Never underestimate the power of the  smallest acts of kindness.

Strangely enough despite not intending it too, my time volunteering at Leonard Cheshire Disability (as they’re now known) helped my trading. I was very quickly able to put my losing trades into perspective for what they were, just a business expense that said nothing about me as a person. Compared to what others had to deal with I had no excuse for self-pity or moaning about the outcome of my trades. I was still in a very fortunate position.

(Furthermore when I’m feeling smug and self-satisfied with myself I can compare myself to Leonard. He survived 101 combat missions with Bomber Command, led the 617 Dambusters Squadron, won the Victoria Cross, flew on the Atomic bomb raid on Japan, then single-handedly built a global charity that did good for thousands of people across the world. So my meagre accomplishments are of no real significance. I have a long, long way to go!)

So if you find yourself a little jaded, or alternatively, find yourself completely immersed in your trading, to the detriment of all else, then I would heartily recommend making some time to go and volunteer at a cause or charity that means a great deal to yourself. It doesn’t really matter what it is or what you do, just get out there and help others less fortunate. I think you’ll find you’ll grow as a person and as a trader and you’ll be richer for the experience.

Trade well

Paul

 

 

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