Global Macro Trading Journal
- Thread starter Daal
- Start date
This is not to say that it was easy or that I didnt had periods where I struggled. But what I really like about daytrading is that you can trade like a poker player who only plays with the nuts and not get punished by it. In position trading if you are too strict you might ended missing the 2-3 good moves that happen every year or you might be out of sync with the market when they arrive because you are not doing anything other than reading.
In daytrading you are always out there managing trades and yet you can still strike a balance with selectivity and have good returns with lower volatility because of the abundance of opportunities
Of course, its not as scalable but by the time you reach liquidity constraints you will be very rich already. I interviewed recently (for the 2nd edition of the book) a trader who made over $3M last year day and swing trading. He said he is reaching limits in terms of capacity and is investing in other things his surplus capital. I wouldn't mind reaching capacity constraints with that kind of return!
In daytrading you are always out there managing trades and yet you can still strike a balance with selectivity and have good returns with lower volatility because of the abundance of opportunities
Of course, its not as scalable but by the time you reach liquidity constraints you will be very rich already. I interviewed recently (for the 2nd edition of the book) a trader who made over $3M last year day and swing trading. He said he is reaching limits in terms of capacity and is investing in other things his surplus capital. I wouldn't mind reaching capacity constraints with that kind of return!
Now that Syriza won, watch Greek as a buying opportunity if they get out of the EUR and their new currency tanks a lot. Their stock market will be ready to soar for years if that happens. Excellent risk/reward. Quite similar to when countries during the great depression got out of the gold standard
Danish central bank: 3rd cut in last 12 days to protect currency peg:
rate cut 3
http://www.zerohedge.com/news/2015-...ark-danish-central-bank-cuts-rates-third-time
rate cut 2
http://www.zerohedge.com/news/2015-...cond-time-week-intervenes-market-preserve-peg
rate cut 1
http://www.zerohedge.com/news/2015-...r-slashes-rates-20bps-amid-currency-peg-fears
Chart showing rate cuts 1 and 2:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01/20150122_EURDKK.jpg
Note that with today's rate cut at about 10am eastern, EUR/DKK briefly rallied from 7.4440 to 7.4456 (less than a 0.03% move), but then gave back all those gains within 5 minutes. Now at 7.4431 * 7.4434. So the market is basically saying that the most recent rate cut from -0.35% to -0.50% is not enough to stop DKK strength.
Daal: any thoughts on selling EUR/DKK ?
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rate cut 3
http://www.zerohedge.com/news/2015-...ark-danish-central-bank-cuts-rates-third-time
rate cut 2
http://www.zerohedge.com/news/2015-...cond-time-week-intervenes-market-preserve-peg
rate cut 1
http://www.zerohedge.com/news/2015-...r-slashes-rates-20bps-amid-currency-peg-fears
Chart showing rate cuts 1 and 2:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/01/20150122_EURDKK.jpg
Note that with today's rate cut at about 10am eastern, EUR/DKK briefly rallied from 7.4440 to 7.4456 (less than a 0.03% move), but then gave back all those gains within 5 minutes. Now at 7.4431 * 7.4434. So the market is basically saying that the most recent rate cut from -0.35% to -0.50% is not enough to stop DKK strength.
Daal: any thoughts on selling EUR/DKK ?
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Background:
http://www.bloomberg.com/news/artic...it-rate-to-minus-0-2-after-snb-shocks-markets
"His (Governor Lars Rohde ) jobs is to target 7.46038 kroner per euro. While the bank’s official tolerance band is 2.25 percent, in practice it has stayed within about 1 percent of the target."
Comment: 0.5% from 7.46038 is 7.42307. 1% from 7.46038 is 7.38577. However on 16 January the strongest level was 7.42755, so well within the 1% band.
http://globaleconomicanalysis.blogspot.com.au/2015/01/denmark-announces-currency-peg-is.html
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http://www.bloomberg.com/news/artic...it-rate-to-minus-0-2-after-snb-shocks-markets
"His (Governor Lars Rohde ) jobs is to target 7.46038 kroner per euro. While the bank’s official tolerance band is 2.25 percent, in practice it has stayed within about 1 percent of the target."
Comment: 0.5% from 7.46038 is 7.42307. 1% from 7.46038 is 7.38577. However on 16 January the strongest level was 7.42755, so well within the 1% band.
http://globaleconomicanalysis.blogspot.com.au/2015/01/denmark-announces-currency-peg-is.html
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hah, I did a quick analysis of this exact trade today after the rate cut. I didn't put the trade on. Here are some quick conclusions (not enough time analyzing mind you)
-Their inflation is low and economy is weak, perhaps the central bank WANTs to keep printing and cutting rates. They are in similar situation as the SNB except they cant just walk away from the peg as this would mean they would potentially face problems with their EU membership. They also have been in this position since 99 and don't seem to have the hard currency dogma of the swiss folks
-The currency is overvalued in PPP basis versus the EUR. Which is then undervalued vs the USD. I'm not quite how much it would be worth if it was free floating. Maybe it would rise 10% or 5% or 30%, maybe it could even go down? crazy to say but its hard to tell. I got to run the models that Ackman run on the HKD.
-That said, its a triple AAA rated country with a large current account surplus in the middle of europe, its likely the currency is undervalued
The risk/reward seems good, I might put this trade on for a few months just in case. The cost is low and who knows, it might work. I just got to be sure the currency is going to rise and by how much first
-Their inflation is low and economy is weak, perhaps the central bank WANTs to keep printing and cutting rates. They are in similar situation as the SNB except they cant just walk away from the peg as this would mean they would potentially face problems with their EU membership. They also have been in this position since 99 and don't seem to have the hard currency dogma of the swiss folks
-The currency is overvalued in PPP basis versus the EUR. Which is then undervalued vs the USD. I'm not quite how much it would be worth if it was free floating. Maybe it would rise 10% or 5% or 30%, maybe it could even go down? crazy to say but its hard to tell. I got to run the models that Ackman run on the HKD.
-That said, its a triple AAA rated country with a large current account surplus in the middle of europe, its likely the currency is undervalued
The risk/reward seems good, I might put this trade on for a few months just in case. The cost is low and who knows, it might work. I just got to be sure the currency is going to rise and by how much first
Thanks for your analysis. It may be simplistic analysis, but you would think the currency is undervalued (versus EUR) if they are so desperate as to cut interest rates on 3 separate occasions to -0.50% in the space of 12 days.
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The second rate cut was last Thursday, then the third rate cut today. So does that mean they cut to -0.65% next Thursday?
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Looking at Norway and NOK (similar country with similar econ stats, both AAA rated with low debt to GDP ratios and current account surpluses), it looks like the DKK doesn't have that much potential to rise. According to the OECD the NOK is overvalued by 48% against the USD (free floating), the DKK, by 40%. A 8% uncertain valuation closure seems risky to chase, specially because the central banks might decide to send the currency to the other side of the band to clean out some speculators. It has happened in the past (HKD in 1997 IIRC)
I don't plan to take a position but if I do, it would be small
The Saudi Arabian Ryal might be a different story, got to do more digging there