How to make 20k in less then 5 days
What an impressive kickoff to the year! Despite the stock market's initial decline, largely attributed to tax harvesting and rebalancing, I still anticipate a substantial influx of funds returning to the market.
This year is poised to be another double-digit growth period for equities. If one selects the right stocks, the potential for triple-digit account growth remains on the table.
Turning to
EURUSD, the year started with the expected volatility, driven by a one sided trade, institutions short on the DOLLAR and favoring other currencies particularly the EURO. Any new data would cause an unwiding of their trade and more then average volatility.
In anticipation of potential market movements, I shared two trades with my community just before the market open on Monday night.
1. Trade Idea #1 (Rating: 2.5 out of 5)
Synopsis: The Fed minutes, scheduled just before the US close, may echo previous speakers' dismissal of imminent rate cuts.
Trade - SHORT (this is protection, we are not going to profit from this)
Position - 1.10300
Take Profit (TP): NON
SL Break-Even, or 1.1100.
2. Trade Idea #2 Rating 3.5 out of 5
Synopsis We are looking to capture any weakness from technical and fears of any messaging from the minutes.
Trade - LONG, (ideally the size of this trade is equal to the short above, our risk is neutral until the Short BE hits)
Position - anywhere near low 1.09xx or anywhere in US Open. We will not force the trade. We then wait for Jobs data
TP - 1.15xx (we will add to our position in increments)
SL - NON - Our short will hedge our long, and will remain in this position until our short hits BE, securing our profits
These trades successfully capitalized on early-day volatile movements. The EUROZone PMIs on the 4th Jan further reinforced our short bias:
However, positive monthly PMIs from France and Germany altered our outlook, ruling out a 'Deflation' scare. The Fed minutes, leaning towards a conservative stance with no mention of rate cuts, allowed EURUSD to hit 1.09100, aligning with our second trade idea and securing profits.
Analyzing the EURO volatility index (EVZ inverted) revealed volatility having peaked and reducing, indicating towards a stronger EURO.
On NFP day we remained focused on adapting our trades to incoming data.
Upon reviewing the data release, I observed that while the headline figure surpassed expectations, there was a revision of -71k jobs from the preceding months. If this trend persists, it could result in negative job growth in the upcoming months. Additionally, a cause for concern was the 4.1% increase in hourly average pay, attributed to the holiday season dynamics. The report acknowledged that individuals typically do not face job terminations before Christmas, and many receive one-time bonuses during this period, introducing significant noise into the analysis. As a consequence, the price action exhibited heightened volatility during this phase. Once the market understood the data, we saw a reversal in the price action.
Although my profits were secured, we had one more data released left for the day, and as per my plan I wouldn't hesitate to restructure my trades if new data contradicted my trade ideas.
The week's final data point, PMI services (ISM service: 50.6, Prior: 52.7), hinted at a soft side for the Dollar, reinforcing the bearish dollar stance. Services were on the brink of contraction, raising concerns about job sustainability at the current interest rates. The question i would put to the fed, at what point do employers continue to fund jobs through their savings or do they start cutting jobs to save their margins. I think the fed knows this answer!
In contrast to 2023, during which I accumulated trades and expanded my equity holdings, this year, my primary objective is to secure profits and minimize the holding period. The current market situation is marked by uncertainty, generating substantial volatility and potential drawdowns. Consequently, I am prepared to promptly close positions at a loss, prioritizing a data-driven approach to trades over reliance on technical analysis. I anticipate an almost 16% move on EURUSD this year, and this will be extremely volatile compared to the more subdued move of only 4.33% in 2023
As a reminder for new to the market, consistent explanation and adherence to a trading plan are crucial. If you follow traders who only give a buy or short signal with no fundamental explanation then this not sustainable way of trading and those follows should be avoided. As is overtrading, this is a detrimental habit and this is one of the single reason why retail traders incur more losses then they should, new traders should exercise extreme caution.
A final point to note; July is a crucial period for Powell and the fed, akin to NEMO. If they haven't finalized their entire fed cut by then, accusations of political interference favoring Biden and Yellen may surface. Powell has adeptly steered the economy from double-digit inflation to nearly 2%, all without causing a surge in unemployment. As the only Federal Reserve chair in history to achieve this feat, I believe Powell is unlikely to jeopardize his legacy to assist Biden's electoral prospects. Instead, his legacy will form a part of the establishment in the form of a library or a policy named after him. Historians will look to Powell for inspiration when they have to overcome future inflation. Well done Fed Chair!
As always, Links to my verified P&L and Community is available in my signature.
Good hunting traders
This year is poised to be another double-digit growth period for equities. If one selects the right stocks, the potential for triple-digit account growth remains on the table.
Turning to
EURUSD, the year started with the expected volatility, driven by a one sided trade, institutions short on the DOLLAR and favoring other currencies particularly the EURO. Any new data would cause an unwiding of their trade and more then average volatility. In anticipation of potential market movements, I shared two trades with my community just before the market open on Monday night.
1. Trade Idea #1 (Rating: 2.5 out of 5)
Synopsis: The Fed minutes, scheduled just before the US close, may echo previous speakers' dismissal of imminent rate cuts.
Trade - SHORT (this is protection, we are not going to profit from this)
Position - 1.10300
Take Profit (TP): NON
SL Break-Even, or 1.1100.
2. Trade Idea #2 Rating 3.5 out of 5
Synopsis We are looking to capture any weakness from technical and fears of any messaging from the minutes.
Trade - LONG, (ideally the size of this trade is equal to the short above, our risk is neutral until the Short BE hits)
Position - anywhere near low 1.09xx or anywhere in US Open. We will not force the trade. We then wait for Jobs data
TP - 1.15xx (we will add to our position in increments)
SL - NON - Our short will hedge our long, and will remain in this position until our short hits BE, securing our profits
These trades successfully capitalized on early-day volatile movements. The EUROZone PMIs on the 4th Jan further reinforced our short bias:
- Ireland: 51.5 (2 months low)
- Spain: 50.4 (5 months low)
- Italy: 48.6 (3 months low)
- Germany: 47.4 (2 months low)
- France: 44.8 (3 months low)
However, positive monthly PMIs from France and Germany altered our outlook, ruling out a 'Deflation' scare. The Fed minutes, leaning towards a conservative stance with no mention of rate cuts, allowed EURUSD to hit 1.09100, aligning with our second trade idea and securing profits.
Analyzing the EURO volatility index (EVZ inverted) revealed volatility having peaked and reducing, indicating towards a stronger EURO.
On NFP day we remained focused on adapting our trades to incoming data.
Upon reviewing the data release, I observed that while the headline figure surpassed expectations, there was a revision of -71k jobs from the preceding months. If this trend persists, it could result in negative job growth in the upcoming months. Additionally, a cause for concern was the 4.1% increase in hourly average pay, attributed to the holiday season dynamics. The report acknowledged that individuals typically do not face job terminations before Christmas, and many receive one-time bonuses during this period, introducing significant noise into the analysis. As a consequence, the price action exhibited heightened volatility during this phase. Once the market understood the data, we saw a reversal in the price action.
Although my profits were secured, we had one more data released left for the day, and as per my plan I wouldn't hesitate to restructure my trades if new data contradicted my trade ideas.
The week's final data point, PMI services (ISM service: 50.6, Prior: 52.7), hinted at a soft side for the Dollar, reinforcing the bearish dollar stance. Services were on the brink of contraction, raising concerns about job sustainability at the current interest rates. The question i would put to the fed, at what point do employers continue to fund jobs through their savings or do they start cutting jobs to save their margins. I think the fed knows this answer!
In contrast to 2023, during which I accumulated trades and expanded my equity holdings, this year, my primary objective is to secure profits and minimize the holding period. The current market situation is marked by uncertainty, generating substantial volatility and potential drawdowns. Consequently, I am prepared to promptly close positions at a loss, prioritizing a data-driven approach to trades over reliance on technical analysis. I anticipate an almost 16% move on EURUSD this year, and this will be extremely volatile compared to the more subdued move of only 4.33% in 2023
As a reminder for new to the market, consistent explanation and adherence to a trading plan are crucial. If you follow traders who only give a buy or short signal with no fundamental explanation then this not sustainable way of trading and those follows should be avoided. As is overtrading, this is a detrimental habit and this is one of the single reason why retail traders incur more losses then they should, new traders should exercise extreme caution.
A final point to note; July is a crucial period for Powell and the fed, akin to NEMO. If they haven't finalized their entire fed cut by then, accusations of political interference favoring Biden and Yellen may surface. Powell has adeptly steered the economy from double-digit inflation to nearly 2%, all without causing a surge in unemployment. As the only Federal Reserve chair in history to achieve this feat, I believe Powell is unlikely to jeopardize his legacy to assist Biden's electoral prospects. Instead, his legacy will form a part of the establishment in the form of a library or a policy named after him. Historians will look to Powell for inspiration when they have to overcome future inflation. Well done Fed Chair!
As always, Links to my verified P&L and Community is available in my signature.
Good hunting traders
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