The big driver this week was the fall in the Greenback and you can see that against the Swiss Franc and the Euro. Therefore by default the Euro was stronger helping our EURGBP higher and the dollar was as I said weaker, helping our USDJPY trade lower. That was the correlation even though I am officially not trading the same currency twice. Obviously EURGBP has had a good week and the weekly candle is extra significant in my mind because having put in a lower weekly low on Monday we are finishing the week close to the highs and well above the moving average. As EURGBP was responsible for the majority of the DD so the majority of the DD is now gone. There is some resistance at 0.87 but above that it's too early to declare a TP target. Obviously it's a balance between making the risk worth it and also reducing any further risk given the size of the basket. USDJPY is complicated but it did break back below the 110 mark as I suspected it would. You can never say anything in markets with 100% certainty but I wonder what it will do if the equity markets have a few bad days and capital moves to the Yen. My bet (literally) is that a pull back off all time highs in the equity markets will help the USDJPY trade further. In short progress after some anxious weeks I'd imagine.
Our two markets EURGBP and USDJPY continue to trade in deep overbought and oversold territory and the difficulty is that both are getting deeper into DD at the same time. You might call that bad luck but we are where we are and as always our business is with the price. As you know there are various "soft" stop loss levels depending on high, medium or low risk. The most immediate danger is the High Risk account obviously and then on down the line to the low risk account. Therefore IF both markets continue to move deeper into DD AT THE SAME TIME I will begin to prioritise the EURGBP trades over the USDJPY trades and begin to cut some of the biggest losing USDJPY trades first. This will improve the USDJPY average entry and relieve some of the pressure on the account in general. Rather than the blunt instrument that is the hard stop loss, this strategy is more nuanced and in my opinion easier and faster to recover from. IF however one market eg EURGBP begins to improve then that improved DD will allow some flexibility on what we do with USDJPY. If USDJPY improves first then that also gives us more wiggle room overall. While I see the USDJPY break of the multi-year wedge formation at circa 110.00 I am not that impressed with the follow through so far even though the S&P500 has passed 4000 which in theory would weaken the risk correlated Yen. USDJPY is very stretched at this point and a close below 110 could have the "longs" scrambling to sell since their "buy signal" is now wrong and that could accelerate a move lower. EURGBP is responsible for most of the DD. It's trading a lot off the vaccination story which is going so much better in the U.K than in the EU and indeed France is now gone into another lockdown. Then again we've know this story for some time and the Pound has already benefited significantly from this fundamental trade. I do see support all the way down at 0.83 but in the 0.85's it is now as oversold weekly as it was at 0.83 back in January 2020. I think this market has a good chance of reversal. I know this update is a bit complicated but in fairness people have been looking to know what the plan is and this is the plan.
USDJPY: Average Entry circa 108.20, EURGBP: Average Entry 0.8725. Having begun the week well it takes a bit of a psychological toll to see the EURGBP gains taken back. The driver with both EURGBP and USDJPY is partly rising yields favouring the dollar against the Euro which both drags the Euro down versus the Pound and also pushed USDJPY higher too. The other major component is risk trends with equity markets largely bullish though the past few session have seemed more indecisive. A pull back in equity markets will favour the Yen and the overbought USDJPY will drop if this happens and that would suit our trade where breakeven is actually not that far off. Average trade length is 8 days since 2015 but obviously averages don't tell the full story. There were long periods in every year where I opened trades as per the trading strategy and we got stuck in them for longer than was comfortable. This happens and it's the downside of the strategy. If position sizes were too large it could be fatal but they are not. However that is why I am always banging on about position size.
USDJPY: Average Entry circa 107.85, EURGBP: Average Entry 0.8725. If it seems like our trades have gone nowhere in a week and that's because it's true. Right now the market is trading very close to how it finished last Friday represented by weekly doji (type) candles so in layman's terms after such an extended move both markets are indecisive. Frankly this is boring and if you are bored too then that's at least two of us. It occurred to me during the week that it's when we don't give in to fear, greed or boredom that extended profitable strategies are built. Both markets remain quite extended but don't always turn on the dime we are looking for.
EURGBP Average entry circa 0.8725. This market has been attempting to form a bottom after recent declines and indications today are encouraging that is has. EURGBP has woken up a little and is attempting to swing higher to regain the 0.86 handle this afternoon. Weekly RSI conditions are as oversold as they've been since late 2019 into January 2020. The length of time in the trade is a little discouraging however trading tests our psychology in many ways and our capacity for patience is up there. USDJPY average entry circa 107.64 is a yield story up to now. The Biden stimulus package is assumed to be inflationary therefore higher rates, therefore the dollar strenghtens and buys more Yen. This makes sense though the aggressive move puts this market about as overbought as it's been since September 2018 and before that you have to go back to "Abenomics" (who remembers that). The market has shown some signs of exhaustion in recent sessions and notwithstanding today's price action may be beginning to get a little top heavy. We are six trades in and a temporary return of risk aversion like for example a few days decline of equity markets off lofty levels could see the bears take control in spite of the yield story as the Yen is seen as a safe haven.
We're out of the worst of the DD with the cash higher too. With GBPUSD closed that leaves me one hand to trade USDJPY which is quite overbought for the fundamental reason of yield differentials. Whatever! There's always a fundamental reason and I always place a counter trend trade. EURGBP is now open quite some time given recent history but being a major forex pair the SWAPs are perfectly manageable. The price of SWAPS is one of the reasons I no longer trader exotic pairs.
At circa 2% I am afraid February was about as underwhelming as January was impressive. C'est la vie, however the DD has also improved in the past few sessions and as I speak the GBPUSD basket is actually in profit. Looking better for March.
After a few days of stress the bad reviews begin, the panic sets in and weak hands fold their cards and go looking for the next strategy/trader completely and willfully ignoring the long history of these accounts. The "told you so" guys come out of the woodwork and push their own agenda. It's been like this for five years and it's no different now.
I get a sense people are looking for me to say something about the current trades. Actually it's more than a sense, people are taking conversations on other forums, copying them and then sending them to me via Telegram. They say it is to prove how much the "newbies" are panicking but lets face it, they are just looking for me to hold their hand and re-assure them too.
So there is no honest way I can say things will be okay. All I can point to is the fact that our position size is correct, our total number of trades is correct. The DD is well within stress levels designed for the account. Sterling is quite overbought and the prospects for the U.K are looking good. Hence I am selling it. Remember this is CONTRARIAN strategy and has been so since 2015. I am personally betting $260K across three accounts that I will be correct yet again. Patience and control is much harder to achieve than greed and fear.
I wonder did we just have a blow off topping/bottoming process with GBPUSD and EURGBP. Someone just asked me how far would I go and I was tempted to say I'm a fan of Elon Musk and SpaceX but the joke could be lost. I did say I was going to take more risk in Q1 but I think we may be done with adding new trades at this point. The market is going to reverse off this fairly parabolic move. How do I know this? It always does/has. The question is not will it reverse, the question is can we be patient and given our total position size I think we can. To add too many positions is to begin to lose the power to speculate and begin gambling so let's not go that far.
A week of two trading stories. While the EURGBP basket remained range trading and I’ve been unable to hit my target price, all other trades such as USDCAD worked fairly well. Therefore the cash is higher though we go into the weekend stuck still with our EURGBP which remains oversold and just needs a little more time.
So as I write we finish the week with a circa 3% DD in the high risk account. My EURGBP trade was in profit yesterday but not by much and not enough to be honest given the BOE rate decision was pending and I figured the volatility around that would give me more. With the benefit of a time machine I'd have taken the profit because now that position is largely responsible for the DD small enough as it is. Therefore I am into a grid as the Pound strengthened into oversold territory H1,H4 and D1. This is the strategy. So far today the market has traded a little higher so the DD has been improving as it works off some of the H1,H4 oversold conditions. I'm not much concerned and hopefully this domino falls like the others next week. USDJPY is partly a play on the S&P500 which is at all time highs again. USDJPY has destroyed many a trader over the years because of it's capacity to really move so I will be slow to sell more and quick to really space out the entries in the grid if it continues to move against me. Otherwise I'm pretty relaxed and patient about the positions. Have a good weekend.
As you can see in the link in the forum Paypal is no longer available in MQL5 and there is a forum discussion about it https://www.mql5.com/en/forum/361791. As my bank is in Europe (Ireland) none of the other methods of withdrawal are available to me. This means that while you are still charged a subscription fee I am not able to withdraw it so for now at least I am effectively working for free while you are being charged.
I will give MQL5 until the beginning of March to resolve their issue though some in the MQL5 forum say Paypal will never come back the fact is that it was gone before and DID come back.
If it is not back by March I will not allow the situation to go on further and will delete my signals.
WHAT CAN YOU DO? This is a shame for the 600 or so subscribers that I have slowly built over the years but I am still a popular trader at Signalstart.com who do use Paypal and have never had any downtime with their payment processors in the five years I have been using them. IF you want to be sure I would suggest you open an account at signalstart.com and search for Blackwave Pacifc, Blackwave California or Blackwave Alpine.
For now I am happy to work for free for another month however if you should be made aware of the slightly unfair situation where you are being charged.
January 8.78%. As I decided to stop trading last Wednesday I completely forgot about trading for a few days to the point that I forgot to send the Friday update so here it is. January's 8.78% is actually the best monthly performance since March 2019 (8.87%). With the few gains we've had so far by February 2nd we are looking at a 10% gain since January 1st. So the year has begun well and I at least will be more than happy to compound the bigger balance for the next eleven months. The trick here is keeping it going without going off the rails. I want a good Q1 2021. It's easy to push down on the accelerator but as soon as you do you hand control over to unpredictable events to a greater extent. Therefore position size will remain firmly in control as our primary weapon for risk control and no more than two pairs at a time. This is where system trading comes into play versus betting. A system does not get you rich overnight. It's methodical and forgive me a little boring however a system that you are comfortable with gives you confidence and competence when things are not going your way. Anyway on with February.
A couple of trades look interesting. #GBPUSD and #AUDNZD on the short side, perhaps #USDCAD and #EURGBP on the long side, however nothing is too compelling. Markets have moved off the extreme levels that give me more confidence, Biden is in, there's been no Trump Coup D'Etat.....for now so all is well with the world which doesn't suit us at all. We prefer "war, peace, famine and upheaval..." - Wall Street 1987, or to put it more delicately a grid strategy requires markets to get a bit insane from time to time. We never have to wait long. For now it's back to cash and in excess of 6.5% so far for the month in the high risk account with a week to go.
Slightly bizarre week with a FAT finger trade slowing me down. The DD yesterday didn't bother me at all, it's nothing compared to what the strategy is designed to withstand but I would have hoped to have more to show for it. Officially we are higher for the week but the performance doesn't exactly tie in with me wanting to take more risk for more reward in the first few months of the year. There was definitely more risk. We were close to profit on EURGBP earlier but it may have to wait. Also that EURAUD was showing a fairly okay profit at 1.5732 but upon beginning my selling it quickly dropped 10 pips before I could get out of everything to the point where I had to stop selling in the low risk Blackwave California account and now a few hours later it's down in the 1.5660's! So for all accounts except California (which still has the first basket) I'm buying it again. The fact that the low risk account ended up holding the first basket is largely random, it could have been any other account. I guess it's only the first two weeks of the year so plenty of time for a good January, February and March.
Happy New Year. Around this time last year I declared that I was looking for a good January/February because due to the nature of compounding that would set us up nicely for a good year. As you know I have my "$1m by April 2023 Project" for my three combined accounts who's combined balances this evening now sit just under $250K and it obviously helps that project too. In recent times we've seen how the Australian regulator can interfere in our plans and my mission now is to be independently wealthy before the regulator, a broker or a law maker has another brain fart. In the end last Jan/Feb were not that impressive so I will make the same effort again this year. If that requires me taking on a bit of risk then you know why. The buck remains fairly beaten down as you can see with EURUSD still above 1.22. This is reflected across the spectrum of dollar pairs. The last few days have seen something of a rally but I am essentially keen to buy it on weakness and buying USDCHF and USDCAD is where we made money this week. Close to TP on GBPNZD tonight too.
This year 70% ROI. $4m client money. Second Portuguese apartment bought by Blackwave. Blackwave absorbed into a new company Blue Wave Equity & Investments. $230K Blackwave Funds. €35K committed to St Kevin's Boys School, Kilnamanagh, Tallaght, Dublin. €2K to fund school meals in disadvantaged schools.
Next Year Equity Investments Property Investments Continuing the goal of $1m Blackwave money by April 2022.
Breaking through more obstacles than the Dukes Of Hazzard :-).
Back to cash today and for Le Weekend. Next week will likely be a low liquidity week though there may be some opportunities in USD pairs given how beat up the Greenback has been recently. Ticking along nicely and not looking for any trouble. At this point many traders would pack up and not risk their end of year bonus by taking on risk so late in December. I however don't work for GS or Barclays. I work for me dinner and my plans and they don't take nearly as much downtime.
Far from withdrawing I will be adding another $10K to my balance in the medium risk account over the weekend. As we are at 100% cash it cannot affect open positions. My goal is to compound as I said this time last year. Running my total balance of all accounts and making an assumption of 5% per month (based on historical data, no more deposits or withdrawals) that puts me at $1m AUM in 28 months. Hmm! They say if you want to make God laugh tell him your plans but on the other hand we must decide what our destination is in order to aim towards it and arrive at it. Erm anyway the high risk account is at 2.63% so far this month and not quite halfway through December and north of 65% for 2020 so far. Have a good weekend.