Global Macro Trading Journal

Quote from gmst:

My prediction is coming true. Sorry for boasting, but I can't help it :)

I think long dollar is this week's trade.
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Dollar is rallying but now I am closing all my long dollar positions - especially the long usdchf position. I am moving 100% into december gold now. Yesterday's gold price action was weird and it went down, but today the strength that Gold has demonstrated has given me the confidence that its going to have a mighty run in the next week or two or maybe longer - especially after Trichet's dovish comments and potential actions from Fed.

Oflate, gold has become highly uncorrelated with other assets. Today dollar is going up but gold has also gone up substantially, one has to consider the day when dollar gets thrashed, the potential for gold to go up on that day is even higher.

Today, I also bought some physical gold - oops for not buying yesterday.


Edit: I welcome everyone to question my simple thesis and put forth counter-arguments.
 
Quote from gmst:


Edit: I welcome everyone to question my simple thesis and put forth counter-arguments.
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You haven't provided your timeframe and risk/stop loss and price target. So it's difficult for anyone to provide feedback that is relevant to your individual trades.
 
Quote from m22au:

You haven't provided your timeframe and risk/stop loss and price target. So it's difficult for anyone to provide feedback that is relevant to your individual trades.
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Yes, good point. I entered long at 1873, 2 contracts. The trade will be on for a week or two or longer depending upon price movement. I will keep trailing with stop just below last 2 to 3 days lowest price. - I am predicting that price will be above 1950 within a week and might cross 2000 within 2 weeks. I don't know at this point what I will do if price hits 2000 within next 2 weeks. I might book profits or might add to position with tight stops, the decision will depend on other things happening in the world which include cbank's actions/speak, currency markets movements and the price action in gold.

Initial Stop 1850 for one contract, 1780 for another contract.
 
Many major currencies looking weak here, looking at short EUR, JPY, AUD, GBP and of course CHF on a bounce vs USD. AUD and EUR being the most compelling. SEK and NOK could be better candidates, but I not have traded those, I have no idea how they behave. Fundamental and technical factors are all lining up.
 
Quote from Martinghoul:

They really really want to screw people, so they got involved. In general, they have done this sort of stuff in the past, so it's nothing new.
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Yes, it shows their determination to do everything in their power to put a floor for eurchf at 1.2. In the process, institutional traders and hedgefunds will get hurt badly. If they are successful, it will be the 2nd example of a central bank (after HK in 1997) which managed to keep the exchange rates stable against all the speculators in the world. This will be a counter example to the thesis that central banks 'always' lose their exchange rate stability fight. However, if in the process they decide to print centi-billions of chf, then they might achieve ccy stability at the expense of inflation. However, HK central bank is a case in point which achieved price as well as ccy stability.

Selling options is really a very smart way to do it - especially when SNB is the 800 point gorilla and has decided to provide a floor to the price. In a very smart way, SNB is now forcing banks to support its position because of their activities to hedge their long gammas around 1.20. Very smart indeed.

Martin, even though they might have engaged in options markets earlier, but I suspect that their intentions might have been different earlier. I don't know for sure though.
 
Quote from gmst:

Yes, it shows their determination to do everything in their power to put a floor for eurchf at 1.2. In the process, institutional traders and hedgefunds will get hurt badly. If they are successful, it will be the 2nd example of a central bank (after HK in 1997) which managed to keep the exchange rates stable against all the speculators in the world. This will be a counter example to the thesis that central banks 'always' lose their exchange rate stability fight. However, if in the process they decide to print centi-billions of chf, then they might achieve ccy stability at the expense of inflation. However, HK central bank is a case in point which achieved price as well as ccy stability.

Selling options is really a very smart way to do it - especially when SNB is the 800 point gorilla and has decided to provide a floor to the price. In a very smart way, SNB is now forcing banks to support its position because of their activities to hedge their long gammas around 1.20. Very smart indeed.

Martin, even though they might have engaged in options markets earlier, but I suspect that their intentions might have been different earlier. I don't know for sure though.
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I'm fairly sure if they had to pick between price stability and FX rate they will pick price stability. But their inflation is too low to even bother(When it gets higher, the market might start to test the bank more seriously). Which goes to show how the BOJ is insane, they should have done something similar ages ago
 
Quote from gmst:


Edit: I welcome everyone to question my simple thesis and put forth counter-arguments.
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Gold is in a bullish trend, and in a long-term bull market. It also held up very well during the recent rebound in stocks. The unfolding EU debt crisis provides a crisis bid, so the recent news flow is supportive, and long-term fundamentals remain good with negative real interest rates and European QE likely around the corner. So being long makes a lot of sense IMO.
 
Quote from Daal:
I'm fairly sure if they had to pick between price stability and FX rate they will pick price stability. But their inflation is too low to even bother(When it gets higher, the market might start to test the bank more seriously). Which goes to show how the BOJ is insane, they should have done something similar ages ago
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Agree... For the Swiss, their other issue is that their property mkt is overheating and moral suasion on behalf of the govt and the SNB is insufficient to prevent the cantonal banks from doing crazy things (it's just a matter of there being nothing else for them to do).
 
It's interesting that the euro is finally starting to take on serious water vs. the dollar. I wonder if the Swiss move has just forced traders into finding another currency with which to sell the euro against.
 
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