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| Another rogue trader.Another strange story of unauthorized trading for a large commercial institution, this time from London. PVM Oil Associates announced that price spike, which pushed price of oil to the highest level this year on Tuesday, was caused by extremely large trade by one of their brokers. Details are a little sketchy, but it appears that 8000-9000 contracts were bought in a single trade, an exceptional size. Price responded by jumping as high as $73.50 per barrel, before falling hard.
PVM disclosed a loss of about $10 Million, small amount as measured by standards of other recent unauthorized trading, rip off's, scams and swindles. An unnamed firm employee was branded "rogue", but no more details were released. So, the whole thing could have been incidental, not intentional. Nobody talks about prosecution, at least not yet, so why even bother with bringing it up? Possibly much bigger losses hide behind and will be disclosed a little later. This is only to soften the public before real news hit the wires.
It has been relatively slow day in Forex trading, rather typical around the 4th of July. No active trading for me, but I reviewed the few remaining long term trades, including the much talked about GBP-CHF trade. Half of it was closed last week, today I exited the balance of the position.
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Another rogue trader. | | |
| What improvement?President Obama expressed concern about unemployment. He said "what we are still seeing is too many jobs lost". He should be concerned. His election pledge was to create 3 Million new jobs. That's why the $780 Billion stimulus package was needed. So far it doesn't look like money well spent- not only no new jobs were created, but the economy keeps shedding existing ones.
For the month of June employers cut a larger-than-expected 467,000 jobs and the unemployment rate climbed to a 26-year high of 9.5%.On top of that, weekly wages fell as well, which is never a good sign. The same economists who have been telling as for months about signs of recovery and turning around, now predict unemployment to reach 10% this year. It is estimated that 14.7 million people were unemployed in June.
That much for pre-election promises, as usual they seem to be baseless and bombastic. But more seriously, how much longer can the unemployment keep rising. I know, the 10% mark, but pays any serious attention to economists? Just about the only thing they produce is "filler" for newspapers. If they could predict anything with some degree of accuracy, they wouldn't be releasing figures. They would be trading, not writing research papers.
I closed most of trades today, including the ones featured in this blog like long GBP-NZD from last post. This trade reached its target, for a fast and decent gain.
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What improvement? | | |
| UK in contraction.It was reported today, that the Office for National Statistics released revised UK economic numbers. Gross Domestic Product fell by 2.4% in first quarter, surpassing projections of economists, which called for 2.1% contraction. That was supposed to be a correction to the original 1.9% figure. This new number makes for the worst quarter to quarter decline in GDP since 1958. However, compared to a year before, the drop was 4.9%, the biggest since records keeping started in 1949.
While the numbers are grim, not everything is that bad. While the Pound sold off on the news, it had reached 1.6745 level against USD. This is the highest quote since October last year. GBP has been on an impressive rally this years, in spite of all the bad news and the "nay" sayers, like Jim Rogers, whole in January boldly declared that UK had Nothing to sell. He has been a little of target so far.
Others are more optimistic about UK's future. Rating agency Fitch, maintained its top triple A rating on UK's sovereign debt. That's despite the economic contraction reported today. Farther more, Fitch's announcement is opposite to a relatively recent negative outlook by S&P. We will have to wait and see if S&P changes its view soon - it is not often that rating agencies disagree in cases of national debt. As for me, I think Pound will appreciate more in a foreseeable future.
My trade in in CAD-JPY didn't reach its target, but I managed to sqeeze a few pips out of it.
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UK in contraction. | | |
| Penny stocks.I have traded most financial instruments at one time or another, but never got into penny stocks. For most people penny stocks are securities of small mining operations, which are short on cash and long on dreams, and usually trade on Vancouver exchange or OTC Bulletin Boards. What I didn't realize is just how simple it is to have an IPO and company listed there.
Apparently there is a law firm in Seattle (as reported by Seattle Times), which specializes in the most extreme of these type of deals. They float "companies" from Russia or Ukraine. For example, they registered Green Bikes Rental Corp, based in Ternopil, Ukraine. This Company raised about $50,000 in its initial stock offering. Very soon after that company had to fold, because "marketing research showed that in Kiev, roads are not designed to have bicycle traffic". Joke, right?
That law firm had a string of these type registrations. They float companies which don't have a product, probably no employees or a physical place of business, other than somebody's house. Common denominator seems to be the rush to have an IPO and listing on OTC Bulletin Board. While probably nobody makes a lot of money on any one deal, but do a filing a month and pretty soon we are talking serious money. While seemingly legal, it sounds like a scam. Question is, who buys this crap?
I had couple of orders pending from last week. In both instances price moved in opposite direction, so they are cancelled. Yen has been getting weaker, so I decided to see if it keeps moving that way.
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Penny stocks. | | |
| Half year mark.It is almost the end of June, half a year has gone by. I think it is a good time to take a look at the results generated by my discretionary trading. That's what this blog focuses on- trades taken not by following a "system", but rather compilation of trading strategies with a small dose of a "gut feeling". Mostly, though, some rules are employed only not as rigidly as they would be if traded in a mechanical, systematic approach. I make the decisions, not a software or robot, hence "discretionary" trading.
In early April I went over my sample results for first quarter of the year. That post focused on not using much leverage and this trend continued. Most of the trades used 1:1 leverage, a few a little more, but almost all were 2:1 or under. In fact, that account only had one trade with 2:1 leverage, and that was the very good GBP-JPY trade from few weeks ago. Other than that, no leverage. I want to remind that these figures apply to individual trades, not total trades in the account at any given time. But even that was modest. I don't think that effective margin ever exceeded 5:1 level.
Trading environment changed a little from the first quarter of the year. Moves have become smaller, price ranges have gotten more compareble to historical averages, falling from the extreme levels of early 2009. My trades' objectives were not as ambitious, fewer transactions were made using daily and weekly charts. Also, my funds were spread out across more accounts and sub-accounts, which resulted in less trading in any one account.
I will discuss the same account as in my report before. For details of performance from the start of the year, read the original post, Trading Forex without (much) leverage. In a nutshell account was almost doubled by mid April, from original
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Half year mark. | | |
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