Dear Investors,
We trust this email finds you all well. Happy thanksgiving weekend to those of you who celebrate this wherever you may be. Typically we do not send out updates over a long weekend for many, however, as our ongoing commitment to keep trading related communication flowing at all times, we believe it is warranted to send this out.
Some of you have been asking us this past week, about our news trading policies, and we wanted to address this, as some of our programs typically trade through the news, while others try their best to avoid it like the plague. Well, this week was an exception for both, as there was an UNANNOUCED news event which was the ECB Negative Deposit Rate.
This is very frustrating when it happens. The conspiracy theorist in us thinks that these types of announcements are meticulously planned and calculated. Basically some policy maker got word from above by the central bankers to make the announcement, decided to not give notice on it, and called his hedge fund country club mates and said - watch this! (Oh yeah and get short on the euro).
These are a bunch of desperados in our view, and it is clear if needed they will do anything to keep the Euro down. This caused the market to move 70-90 pips in a few seconds, and it also took the GBP with it momentarily as well. What effect did this have on us? Well… two of our programs made money, and two lost money. Arc FX and Stone Fund made money, Figaro and Valor FX lost. This was a coin flip at best for anyone with open trades. There is not much you can do with unexpected, unannounced (and pretty consequential!) news.
Valor FX was affected the most by this - taking more than 3 Renko trades to full stop loss in a few seconds. We hit about the worst case scenario with Valor now. We are down approx -4.8% with the program since starting last month (official live stats: https://www.myfxbook.com/portfolio/valor-fx-mam-account/712250). This is not exactly where we would like to be with the strategy to date, but we know the resiliency of the combination of strategies involved, and while it is a small set back, we fully expect a speedy recovery, and are hoping to catch a nice continuous run of profits with this strategy soon as when it does, it is a really nice experience!
In our discussion with the head trader, he has obviously expressed his frustrations with the unannounced high impact news, as many others in the business have as well, but he and his team are eager to recoup as much as possible before the month is out.
This also prompted a few changes to the risk profile also during the manual time-independent trades. The important point here is that they are going to scale down to a maximum of 1% risk for a single position, but can have open a maximum of two positions at any given time with the same currency exposure (which means a currency or its correlated ones like EUR and CHF or AUD and NZD). So at any given time we will have a max exposure of 2% exposure to a single currency event, such as we saw this week with the surprise ECP announcement - with the manual traded strategies (which account for 80% of the trading at this point).
In other good news, the British partner to the head trader has stepped up again after a small break to contribute manual trades during the early UK session full time. We expect to see a great improvement with this. Both partners were trained by the same mentor and work very well together, we just get manual trading opportunities now from 2 sessions.
Despite some small set backs we will keep learning and progressing in every way we can. For most of our programs we try to really steer clear of highly impactful news, however there will be times throughout the year where we may get caught like this, and it may or may not work in our favour. It is the nature of the beast.
This just goes to prove once again that Forex trading is ALWAYS subject to the whim of the central banks and we have seen this kind of thing before in the last few years by all the usual suspects, BOJ, SNB, and now ECB - it really should come as no surprise by now, but it is never fun to see when it happens.
Franky Forex and Eagle FX
We have been working hard to package up these two new programs for our clients for diversification, and we are almost ready. These will most likely be ready next week, however we will most likely begin the roll out for Dec 1st. Figaro FX is still currently trading on the FFX MAMs, however as soon as Franky Forex is ready, he will be taking the reigns. The delays have been a little tiresome, but we are not really “missing anything” either as both programs have had their worst performance to date during this month. Neither of them are negative, but both are barely positive just over 1%, so they are still retaining their no-loss bragging rights thus far. This does appear to be a tough month for many traders however.
Thank you all for your fortitude and grit, as we journey through the markets (good and bad), and we are certainly looking to end the year of on a great note as we head in to December. We will be sending our typical month end report out soon as well with more detailed information on performance and developments.
As always we remain available and welcome any conversation you may wish to have, and at any time. Have a great remainder of the weekend, wherever you may be!
Sincerely,
The Team and Managed Forex Hub