Global Macro Trading Journal

The correction in the Fed futures has arrived. The Feb 2012 is looking juicy, you only lose big if the Fed hikes 2 times and by 'big' I mean slightly more than you will win if there are 0 hikes, so the R-R is good(About 1.2-1)

To me the biggest risk factor is the middle east and a possible disruption in Saudi Arabia with oil opening on a massive gap up but maybe I shouldn't be concerned about that because the market thinks this will lead to easier policy from the Fed, I dont believe that is correct at all and a number of FOMC members(voting or not) also said that is not correct but because the market thinks so it will give me a chance to dump my contracts and perhaps even short some

There is also the risk that the people who are supposed to come back to the labor force, dont come back at all(The participation rate keeps declining), since inflation appears to be have bottomed, the US could finish the year with a 7 handle on the UR and inflation trending towards 2%, at that point the exit would almost certainly begin

Another risk is if the Fed dumps 'extended period' after QE2 ends, those contracts could sell-off quite badly. This is the first time in a long while that I'm actually concerned about putting a position there(specially a large one), previously I was always thinking 'this is ridiculously mispriced' but now I'm a bit concerned so I can't bet big
 
Open revolt at the Fed, as Bullard calls for an early end to QE part deux to be discussed at April meeting. I don't think Bullard votes on the FOMC, but look for dissents soon from Fisher and Plosser if Ben doesn't throw them some sort of bone.

Also look for the Beard to trot out some of his pet doves this week to counteract recent talk from those three. We'll probably see some sort of column by Fed mouthpieces Hilsenrath and the guy from the NYT on the glories of current Fed policy.
 
I'm happy to see I nearly nailed the bottom in FCX, covering my puts on the Wed morning following the 11% crash in Tokyo stocks. FCX has had a remarkable move, up nearly 20% in less than 10 trading sessions since that Wed. morning.

This afternoon, I re-bought those same puts at about 25% of the price I sold them for. I'm especially energized by this FTalpha piece on the distortions in copper being caused by (who else) the Chinese, who are using the metal the same way Mr and Mrs Joe America used their POS tract house in some Phoenix desert to finance a grand lifestyle.

http://ftalphaville.ft.com/blog/201...says-chinese-copper-market-cause-for-concern/
 
Another update on the distortion in the copper market from its use as collateral for loans.

http://ftalphaville.ft.com/blog/201...r-financing-got-even-more-popular-this-month/

Frankly, I'm not sure quite sure how to trade anything anymore. Central planning or distortions caused by some sort of half-cocked, government-enabled scheme rules the value of pretty much every asset on the planet nowadays.

I can think of no other way to play it other than taking advantage of periods of low vol by getting long options. Anybody buying copper, or JJC or FCX or SCCO because of some inane "BRICs need the stuff' theory is no different than those who slept overnight in the desert to get in line to buy some craphole 20 miles west of Phoenix in 2004. You might make some money, but you better be sure you get your timing right (and you better be sure the West keeps printing money by the hundreds of billions).

Oh, and some buddy of Chavez leading the polls in Peru as of yesterday. SCCO and FCX can say goodbye to any profits from their Peruvian operations if he wins.
 
Haven't purchased the Fed futures yet(Although I still have a residual position on the Dec 2011), they continue to decline so I'm waiting for some kind of stabilization there. I'm not going to bet very big there, probably will risk 10% of my networth in a 2 25bps hikes scenario, profit should be around 8-9% on no hikes
 
Its interesting this trading game, its common knowledge that the vast majority of traders fail. Yet I'm still amazed to re-read books of interviews with great traders to find out that many(if not most) have either shut down their funds due lack of performance, gone broke, underperformed the markets, etc. Every time I hear about this or that amazing trader I know there is some kind of untold story about the guy(Usually, there are exceptions of course)

Just last week I was told about this 'daytrading wizard' in the building I live on, I went to talk with the dude, he says he makes $600 a day daytrading Bovespa mini-futures, I keep asking about strategy and things like that because I'm quite skeptical about the whole thing(But I'm being polite at the same time). He says he built his strategy by trial and error instead of backtesting, to me this is some kind of red flag but then I hear a nugget from him 'this strategy is a good one, I even teach it to my students', of course, I bet he charges them as well

People who can beat markets for long periods are incredible rare, specially for active trading, truth is that we as traders need to fade our own egos because most likely you will either fail or will underperform, thats hard to accept we want to believe that the dream will come easily, that anyone can log every morning in the brokerage account and make $1K easily while living in the Bahamas
But we need to first accept that there is some kind of danger out there and fade ourselves, then after that we can work on how to become that top 5%(1%?) of the world who can beat markets consistently for good money

I'm working on a website where I post a trading guide of things that I learned, good books, math, studies, psychology, global macro etc The content will be free of course. I'm no trading guru so take anything I say with a grain of salt, its simply my own experiences of starting with $10 free provided by Pacific Poker back in 2004(while owing $300 to my mother) to making a living trading, internet gambling in 2011. I even bought a cool domain

It might take some time to get it ready because I'm so lazy to do it, I don't even devote 30 min a day to this so it might take some time but eventually I will put it out
 
Quote from Daal:

People who can beat markets for long periods are incredible rare, specially for active trading, truth is that we as traders need to fade our own egos because most likely you will either fail or will underperform, thats hard to accept we want to believe that the dream will come easily, that anyone can log every morning in the brokerage account and make $1K easily while living in the Bahamas
But we need to first accept that there is some kind of danger out there and fade ourselves, then after that we can work on how to become that top 5%(1%?) of the world who can beat markets consistently for good money
More...
The dream isn't supposed to come easily. The people who survive are the ones who treat it as a full-time job, rather than a "get rich quick" scheme.
 
Just look for miss-priced risk. It could be anywhere. If you want to talk macro, Japan will be an opportunity in the near to mid-term future. There are things that are simply miss-priced due to sentiment.
 
Most underperform or get blown up because they are always playing. 99% of the time, trading is a negative expectation game and you will get ground down even faster than roulette at a casino. It's simply impossible to have an edge every day or every week (in the global macro game). Occassionally - maybe twice in a month, maybe twice in 18 months - a great trade comes along. Other than that, most would be better off on the golf course.

Fund managers are expected to be invested all the time and amatuers can't get away from the action or are trying to make up for losses. My greatest advantage (other than a damn keen intellect) is my ability to do absolutely nothing for long stretches of time. I can't remember the last time I've lost on a big trade that I waited and waited for. My losses all come from the need to be doing something.
 
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