SIF: Example of how hedge-funds operateThe strategy described on the chart is simple. First i'll take a long position to target the last high. From that point i'll take a short position which is exactly the same size as my long position. This means that from that point it doesn't matter what the market will do next, because I have my profit locked between these 2 points. I would preferably see price to then break the last high, so i could add another buy above it. If price gets back to the entry point of my short position, I simply close the extra long, and will not have any negative effect on my profit.
The advantage of hedging your position is that: 1. You'll have no risk from that point, if done correctly. 2. You could add positions if the market continues to surge and make extra profit. 3. No one knows what the market is going to do, it's always a process of probability. So if the price does go up to the last high, and then crashes down, I'm still risk free and could even add more short positions to it.
You could also hedge by going long in one stock, and short another stock which is correlated to the one you went long. You then expect one stock to do better than the other.
Hedgefunds
CFi watch for an ascending triangle break up Good team and great concept. Check it out at www.cofound.it
DD analysis Elliott Wave, along with company analysisDD has recently broken out, and seems to be in the process of it's own 3rd wave movement upwards. According to GuruFocus, the latest major guru trades have been buys with no sells. So the stock likely has some further upside potential thanks to the large shareholdings by certain major investors other than insiders. This would give further credence to the notion that the stock is currently going through a brand new 3rd wave of it's own, which when compared to the greater Elliott Wave analysis, would put this as another large 3rd wave after the first 1-2-3-4-5 and A-B-C completed their own 2 waves. The company is also completing a merger with Dow Chemicals, forming a new company DowDuPont. However, there is uncertainty about the potential of this merger as there are anti-trust issues, and economic questions in regards to the profitability of this new company. (source: Wikipedia) The stock could possibly climb through another 3rd wave, and then a 4th wave down before completing a 5th wave peak within the future.
It will be a goal to find a possible entry for this trade, initially as a day trade for the current breakout, and then later it may turn into an intra-day swing trade by locking in some profits, and letting the rest of the shares ride with potential for pyramiding later on with larger timeframes.
(EURUSD & DXY) HOW INSTITUTIONAL TRADERS COMPARE THE MARKETS!MARKET ANALYSIS: As you can see from the charts both Eurusd and dollar index or showing opposite trade setups. So in Eurusd once the market breaks the flag pattern and closes above the zone we can go for a long. At the same time once dollar index closes below the rising wedge we can short the market below the zone for the given target.
Now this is how a institutional traders compares a trade setup with dollar index, Hope this helps. Cheers!
BREXIT & GEO-POLITICAL AFTERMATH: SHORT GBPUSD - HOW TO TRADEGBPUSD
- At the end of last week GU traded to lows of 1.32 on the brexit vote, before retracing substantially to 1.39 by the end of the day.
- GU retraced 600-700pips after the brexit event IMO solely as investors took profit from their shorts (which causes buying) - thus there was no structural reason for GU recovering e.g. it was that 1.32 had mispriced GU too low for the brexit vote.
On the back of this I expect the following for GU this week:
1. I have a 8/10 short conviction on GU and ultimately believe it will trade <1.30 by weeks end for the following reasons: -
- As on friday, the bearish movements we saw on GBP were 90% fast money trades and NOT real/ slow money positioning (due to different regulations and trading strategies) therefore, this week, slow/ real money will now be able to get behind the short sterling move thus providing momentum for GBP to move lower and sub 1.30.
*Fast money is hedge funds and slow money is asset managers*
- David Cameron UK PM also resigned following the result, thus putting further downside expectations on GBP in the near-medium term particularly as it as all come at once.
- Also the BOE plans to increase its QE by 66% 350bn to 600bn to support markets but this printing increasing GBP money supply affect puts downward pressure on the GBPUSD.
- Further, members of the European parliament have asked and put pressure on the UK to make their exit faster than previously expected, this puts further uncertainty around the brexit and increases the negative impact it may have on the economy and therefore the GBP speculation is made further bearish.
- As pictured I had expected the 1.356-1.382 range that had held at the end of last week to hold for the next 24hrs and for GU to trade relatively flat (24hrs for people to make decisions on positioning) however it looks like corporations and other entities have derisked their GBP exposure over the weekend hence we opened 300pips lower at 1.342.
- With this range broken we now trade in no mans land, thus with all the negative biases my target from now is for GU to drift towards the lows set from last week for now - If the market changes significantly within the next few hours (e.g. trades back into range) i will update this view.
- My target for GBP is <1.30 with a terminal value of 1.25 within the quarter - though i consider that the supportive (no hike) policy of the FOMC will ease GBPUSD losses somewhat. This in mind shorts at these levels are fair 1.34. Alternatively, I also encourage my favourite tactic of shorting/ fading any GBP rallies to 1.38/39 however the chance of GU realising such upside imo is only 50%, with bid trading dominating
Volatility update:
Current GU ATM 50 delta vols trade at 25%, which is surprisingly 2x higher than it was last week (the risk and volatility may not be over).
1wk GU ATM 50 delta vols trade at 30%, significantly higher than last week also.
However 1ms trade 20.49% and are significantly lower than they were last week (illustrating the event risk that has elapsed).
Current GU Option demand is skewed significantly to the downside, with Puts 27.5% vs calls 22.5% thus puts are in demand by about 20% more than calls - this supports current short views (RR -5).
1wk GU demand is also skewed in favour of downside coverage, with puts at 33% vs calls 28%, (RR -5%) with puts being demanded apprx 3% more than calls - supporting the near terms view of short GU
USDJPY as a measure of market risk.
I still suggest using UJ as a measure of GBPUSD market risk - the volatility seemingly isnt over, and with near term uncertainty high, it is prudent to track UJ and use breaks of its 101.2-103.2 range as signals of net risk on or risk-off commitment .e.g. UJ higher risk on (jpy selling), UJ lower risk off (jp buying).
The risk off move for GU imo is lower in this environment, and the risk-on move is higher. Thus, IMO UJ and GU are sync'd, and the two should be used as a tool.
The Definitive Elliott Wave Count For AUDNZD (Daily TF)I do advanced elliott wave analysis for the biggest banks and hedge funds in 3 different countries.
There's a lot of confusion on what a proper elliott wave count is for FX:AUDNZD and I see a lot of people making mistakes here. So here's what the big banks are using and I've written an explanation for each level that I have displayed.
Share this chart with everyone you know who has an interest in AUDUSD, NZDUSD and AUDNZD. This is our view for the coming months.
The main idea is that we want to play a rise up to 1.1910 before 1.2355 (max) in this wave ((4)) correction. This also generally means FX:AUDUSD outperformance vs FX:NZDUSD for this year.
I run my own community training traders to be successful forex traders at The Forex Army.
www.TheForexArmy.com
EurJpy - Short it is!Level play FOLKs! Supply started from first down arrow at around @136.50 area, then price was pushed above for short squeeze to trap retail bull traders. Two consecutive down area after the first one was for trapping gullible retail traders, but intention was always to go down. Then the dump happened & profit was taken, but to continue the short ride. Will they plan to continue the south train ?? Highly probable answer for this is YES! But can anyone be 100% sure of big players motive then answer is NO! But what I have seen throughout from my screen experience suggest that short will be resumed & level @134.20 will be tested. But market is master & time is its tool, it will rule all of us in due time. Time in future will tell us whether we are right or not.
Best of Luck to me & Cheers!
I already banked some pips in initial move down..... reference chart attached.
Selling pressure is still intact. - Euro area pick up has stalled on the second quarter of this year as three of its biggest economies failed to grow.
Consumer prices still fail to grow to meet the ECB's target rate, Ukraine is still at risk of increasing political unrest due to the Crimea crisis. Economic sanctions imposed by European countries on Russia and blocked trade agreements between Russia and the Euro area will only make the situation worse and might cause the economy to stagnate further in the third quarter of the year. Mario Draghi has signalled a risk from what the Euro economy is currently facing. On the other hand, the Spanish and Portuguese economies GDP have picked up in the second quarter. Euro stocks climbed today after data showed that the Euro area economy stalled in the second quarter amid speculation that the ECB will further up stimulus. Such action will only depreciate the Euro further. The Euro is currently retracing and should continue to move downward with the overall down trend. If the Euro closed above the 100 DMA then it should find the next resistance at the 0.236 fib level. Notice that there is a hammer candle stick above the blue arrow confirmed with a higher close, this hammer indicates a short term retracement.
Trade (SHORT)