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Leveraged Loans | Corporate Risk Premium Crisis?Many of you may not be familiar with leveraged loans and the ETFs that have become available to investors through funds over the last few years, but they are important to understand in order to have an edge over the rest of the markets these days - whether that's traditional equities, commodities, derivatives or crypto - as wealth preservation will be a big theme during 2019/2020. Investors have been driven into leveraged loans and related products sharply since the Financial Crisis as a result of record low interest rates in developed markets caused by experimental monetary policy; investors have been desperate for yield! And so we have seen very low risk premium spreads between "risky" junk paper and "risk free" treasury paper as a result of distortions in the marketplace. This spread is currently in the single digits, but during the Financial Crisis - when credit flow started to freeze - the spread skyrocketed into the 40 point range! Treasuries have only room to go lower in the event of a credit crisis and so one can imagine that risky corporate paper will be the victim of such a scenario as companies no longer get access to cheap credit. This will put huge pressure on corporate yields, resulting in defaults and deeply discounted paper. FYI: The Quantity Theory of Credit is my theoretical and empirical inclination. Anyway, keep an eye on leveraged loans and the ETF carrying them. Due to the way these ETFs are held by funds they also carry significant redemption risks, which can cause a run on the funds that issue them and cause funds to panic sell to meet redemption requests from investors. I'm sure there are a few strategies one could devise to take advantage of such a scenario ;)
AMEX:BKLN
by Trader6127
don't worry about your losses what happens if you have a 1:1.5 risk reward ratio(means if you win you won 1/5% of your balance if you lose you lost1% of your balance) and doing 2 trade via any strategy that you prefer in a day (means your open trades should not be more than 2 at the same time). at the end of the month, you do 40 trades so we see below what happens(20 days * 2 trades = 40 trade in a month): ---------------------------------------------------------------------------------------------------------------------- if you win 40 trades and lost no trades you make 60% in a month (40*1/5)-(0*1)=60-0=60% if you win 35 trades and lost 5 trades you make 47/5% in a month (35*1/5)-(5*1)=52/5-5=47/5% if you win 30 trades and lost 10 trades you make 35% in a month (30*1/5)-(10*1)=45-10=35% if you win 25 trades and lost 15 trades you make 22/5% in a month (25*1/5)-(15*1)=37/5-15=22/5% if you win 20 trades and lost 20 trades you make 10% in a month (20*1/5)-(20*1)=30-20=10% if you win 15 trades and lost 25 trades you miss -2/5% in a month (15*1/5)-(25*1)=22/5-25=-2.5% if you win 10 trades and lost 30 trades you miss -15% in a month (better change your strategy) (10*1/5)-(30*1)=15-30=-15% if you win 5 trades and lost 35 trades you miss -27/5% in a month (better change your strategy) (5*1/5)-(35*1)=7/5-35=-27/5% if you win no trades and lost 40 trades you miss -40% in a month (better change your strategy) (0*1/5)-(40*1)=0-40=-40% ----------------------------------------------------------------------------------------------------------------------- Now we average results: (60+47/5+35+22/5+10-2/5-15-27/5-40)/9=10% On average you can make 10% a month At the first sight you may tell yourself how I am going to be rich with only 10% monthly so please attention to below and see what happens if you start with 5000$ 1) 5000*1/10=5500$ 2) 5500*1/10=6050$ 3) 6050*1/10=6655$ 4) 6655*1.10=7320$ 5) 7320*1.10=8052$ - - 12) 15,692$ - - 24) 49,248$ - - 36) 154,563 - - 48) 485,086$ - 56) 1,039,825$ Congratulations!!! Now you are a millionaire after about 4/5 years of hardworking patience and discipline This why we should not be afraid of our losses GOOD LUCK Abolfazl Abedi
Education
by abolfazlabedi
Bitcoin update, Bull flag The last 24 hours have been quite interesting and informative. We saw a nice breakout from the bullfrog on lower timeframes but as many times seen on bitcoin a clear rejection from the top and a dump back to where we started. I think we can go to 4250$ today if the support don't break if the support breaks then we can go all down to 3800$. If BTC goes up i will see how BTC reacts and take a short position on 4210 - 4240. I trade on Bitmex guys let me know what are your thougts :) Your @dk.kern
BITMEX:XBT
by DavidKern
OIL UKOIL BCOUSDPlease find information in the chart bubbles. good luck and have fun trading! always focus on money management. you can take a lot of 1% losses but your account can only handle a view big losses, right? when you lose 10% e.g. 1000$ of your 10k account then you have 9000 left. the next 10% risk trade is only 900$, so the potential winning gets smaller, too. after that 2nd one being stopped out again you have some 8100$ left! risking again 10% of that is 810$ risk for the 3rd trade. now this one needs to be more than -more- than a 1:2 winner to get you back to breakeven. if lost you have some 7300$ left. with again risking 10% (730$) in the 4th trade this one need to be a 1 : 3.6 winner to get you close to breakeven... hope you see the point. in addition: think of your psychology. what does it do to your trading style when you started with 10000$ account and you only have 5000$ left? are you panicking? are you still trading your proven strategy? are you averthinking things and switching markets or strategies or rules? a good chance you will do stupid tings like that, right? ;)
OANDA:BCOUSDShort
by ernstschwarz
2
YEN on a knife's edge. Is the big one around the corner?The global carry trade makes the JPY a good indicator of risk sentiment. When things start to go south you'll see the global carry trade unwind as traders sell USD and buy JPY. Looking at the chart you can see that risk off environments are often punctuated by spikes lower in USD/JPY as there were lately in Oct and Nov. However zooming out and looking at a longer timeframe shows us that the YEN is finely balanced closing right on it's trend line. While I expect it to move lower in the long term as the equity bear market gains steam, for the moment it hasn't broken out and if it can manage to hold and even rally from here the implications would be short term positive for equities.
Short
by The_Pain_Trade
What is the probability of a pullback? Cut your losses smartlyIf people expect an Inverted Head & Shoulders, chances could be very meager in terms of probability. What is the % of chance that we go back to 12xxx? How much time would it take? What would be the bullish triggers, if any? The markets took quite a bit of time and strength to break through the support I've drawn around 11183. If you were long above any support lines and didn't cut, unless you are playing huge bets and that everything is still going according to your original plan, then you should consider cutting quickly any losses from long positions above the support that could become a resistance. Accept the losses, and go again with the trend afresh. You don't want that burden. If anyone tells me that the current daily trend is bullish, then I should reasses my understanding of a bullish trend. Be nimble in cutting losses when it clearly goes against you. There's a lot of readings about risk and money management that are available. Don't let cognitive biases overwhelm you.
FX:GER30
by UnknownUnicorn569872
Gold Projections Using Elliot Wave TheoryHello Traders Here I present to you my wave count on Gold. Gold has been on a steady rise since August completing a full impulse wave cycle and now starting a corrective wave cycle. The last NFP figure falling short at 155K instead of the forecast at 198K alongside with falling wage growth at 0.2% gave way to further upside for Gold. Also the end of the interest rate hike cycle is fueling a more risk averse market sentiment that is pushing Gold prices to an overbought RSI territory. The overbought indication is also reflected on the past two days price action with the bullish momentum stalling @1251.00 price point. In this particular setup I am looking to position short at the corrective wave at point B @1240.00 and trade the last wave until we reach point C @1220 that falls on the prevailing trend line. Alternatively we can position around @1220 level to get an entry in case price finds support on said trend line and ride the next uptrend impulse on the long side. Trade safe, Trade well.
TVC:GOLDShort
by fromzerotospyro
EW ANALYSIS: Risk-Off Sentiment Could Continue; NIKKEI+USDJPYHello traders! Today we will talk about Risk-Off mode over NIKKEI225 and USDJPY, where we see a tight positive correlation! As you can see, the main driver for the USDJPY sell-off was NIKKEI225, which may continue later this week, since we have seen an impulsive five-wave decline. In EW theory, after every five waves, a three-wave pullback follows and we can already see an a-b-c correction in progress, where wave »c« is still missing, so be aware of a Monday rally towards projected resistance areas, from where we may see another sell-off in the stock market and consequently also in the USDJPY! That said, in the NIKKEI225 futures chart, we are tracking a three-wave a-b-c corection, where 22000 resistance area can be tested, before we may see a sell-off continuation! So, as long as it's trading below 22780 highs, we will remain bearish! If we respect correlations, then it's similar with USDJPY, in which we think that 113 area, specifically 113.25 – 113.35 resistance area can be retested before another sell-off, so while it's trading beneath 114 region, we remain in the bearish mode! Early Monday moves are usually fake, so if we get a Monday rally within projected wave »c«, then this would be a perfect three-wave corrective rise that can be easily covered in the next days, when we expect another sell-off! Trade well! Disclosure: Please be informed that information we provide is NOT a trading recommendation or investment advice. All of our work is for educational purposes only.
by ew-forecast
SPX: Weakest Technical Support = Bear Downtrend RiskOf the 3 big stock market indexes, the S&P500 or SPX is supported currently with the weakest technical support. This is NOT a fundamental support level. IF there is sudden panic due to some catalyst, and there are many potential catalysts waiting in the wings, this support can easily be moved through. A breakdown of this support level brings the risk for the end of the trading range bear market we've had so far and the start of a bear market downtrend.
SP:SPX
by MarthaStokesCMT-TechniTrader
PURELY TECHNICAL LONG SWING USD/MXNHey everybody so I am a scalper mostly but since finding how easy it is to share analysis with Tradingview I figured Id just post my ideas since I am analyzing them anyways .. So, here is a decent risk to reward swing setup for USD/MXN .. Friday we had a pretty decent selloff .. The daily candle closed with a huge rejection wick off that daily trendline .. I will be seeking long opportunities to reach the weekly trendline resistance.. Enjoy and take at your own risk ... :)
Long
by subliminal_architect