Sunday, May 27, 2012

Meta-Trader - Euro Breakdown

Welcome back Meta-Traders.

This past week EUR/USD had an important breakdown.  Looking at a quarterly chart to your left,  there a number of important clues to consider.

First note that the current bar has taken out the low of the prior bar.  Second, note that the prior bar took out the low of an important support point (about 1.2850), a low which held in 3 out of 5 of the prior bars.

The prior bar itself tells a story since it constitutes a breakdown of the 1.2850 area followed by a rally.  This price action could be considered finding support and bouncing to the upside.  Yet this rally has failed and the next downside target would take us down to the low set in June of 2010 in the 1.1870 area. 

As for fundamental reasons, the economies of the Euro zone continue to be a mess.  More accurately, the situation can be described as imbalanced.  To get an idea of what i'm talking about, consider the differences in bond yields between the respective governments in the Euro Zone.  This past week, Germany had a very successful 2 year bond auction, with an interest rates of ---- 0%.   That's right, people are buying 2 year bonds from Germany with a 0% yield!   At the same time, interest rates debt issued by Greece are close to 30% with Spain, Italy and the the other Euro zone countries somewhere in the middle.

With the vast differences in economic output between the Euro zone countries (and differences in debt yields), its easy to understand the degree of imbalances involved.   And since interest rates are one of the primary movers of currency, its easy to see that the Euro as a currency is doomed or at least cannot continue in its current form.

As for trading results, we had some small gains in our Atinalla #1 account this past week.  We also had a succesful trades in USD/JPY in our Atipaq Full Portfolio and Atinalla #3 accounts.  Atinalla #3 had a good week and gained nearly 3% for the week. 

All of the other accounts are underwater and our over-reliance on EUR/USD as a trading vehicle may be playing a part.  But our systems profit on both up and down markets, so perhaps we will get some good trending action in EUR/USD (as we did last week) and be able to capture some profits from those moves.

That all for this week, thanks for reading and have a great week.

Sunday, May 20, 2012

Meta-Trader - Playing Defense

Welcome back Meta-Traders.

Since reaching a 3-year high back on May 1st,  US Equity markets have gone into a serious retracement and given up the better part of the years gains in just 13 trading sessions.  In fact in that 3 week period, the SP-500 was down all but 2 days and the Dow 30 was down all but one day!  That's some pretty serious selling.

As for the reasoning, the media has been pointing to a "Fiscal cliff" that will occur at the end of 2012 when several forms of tax breaks and market stimulus expire.  Also, the US Debt ceiling issue will come up again,  And recall the last time at happened, the US lost its AAA debt rating.  And remember the "Super committee" that was formed to solve the financial deadlock?  They have accomplished nothing and just pushed the issue off into the future.

As usual, Europe did us no favors this week with political turmoil in Greece causing panic in the local economy as people stashed away Euros and prepared for an eventual exit of Greece from the EU.  About the only good thing that happened was a flight to safety to the US Dollar which caused some good downside action in EUR/USD and finally made some profts for our Automated Forex Trading systems. 

And speaking of Automated Forex Trading, conditions remaining challenging with every account in the red for the year and now in red overall since the start of trading back in 2010.  One by one, many of the systems have failed either in demo or live trading.   This week provided a bit of a bounce, but its going to take a pretty serious string of winning trades to get us back into profitability for the year and overall. 

Back to equities, I have been able to capture some pretty good profits and I'm sitting on some nice realized gains for the year.   After the sell offs in 2008 and 2011,  I've learned that you have to grab profits when the appear, because they can just as easily go away.  And all that selling has my portfolios at close to 50% cash which is the highest level of cash in the past 2 years.

That's all for now. Stash your cash and have a great week.

Saturday, May 5, 2012

Meta-Trader - Its Getting ugly

Welcome back, Meta-Traders.

Things are getting ugly in the world of Automated Forex Trading.  How ugly are we talking about?

Based on some nasty drawdown encountered this past week, I am down about -12% so far on a year to date basis.  Of the 20K invested, I about down about -$2500.

Take a step back and looking at the larger picture, I'm also down from the beginning of my Automated Forex Trading career.  Running the numbers there, I am down about -8% from the start.

Let's start with Atinalla No1. This is the only account which is still in the positive from the start and appears to be holding onto its gains.

Next up is Atipaq Full Portfolio which has been keeping my Forex portfolio positive overall up to now. This past week it continued it spectacular streak of losses, giving up about 10% and is now down about 22% year to date.

Next is Coatl H1 which has been stopped for some time and is now down about 12% since its startup early in 2012.

Next up is Atinalla #3. This account is now down about 12.5% for the year and since inception. This is another disappointment since this account was at a new equity high back in February of this year.

Continuing the parade of ugliness is Atinalla Custom which is down about 27% since inception and about 10.7% for the year.

Last up is Sunqu Live which is down slightly since inception and for the year.

This past week was a decisive one for Automated Forex Trading. Every investment has a loss cut point and overall, I would put that between 25% and 50% of my entire investment before I pull the plug on Automated Forex Trading.

About the only good news is that I hit a new 3+ year high in my equity accounts this past week before selling off sharply.  But I have taken some good profits along the way and I have already booked profits many times larger than what I have lost in Forex.

That's enough for now, enjoy your Saturday.