I had an epiphany today.

time-versus-money-weighted

I took a bit of a loss in my trading account today, a few thousand quid.

And it made me rethink my life a bit.

I’m actually glad I took the loss.

I’m glad I got greedy and over-traded and lost big.

 

It made me realise that I should just leave my trading to my robots.

Even if they make slightly less money than if I traded manually,

It would free up my time dramatically.

And since time is the most valuable asset we have,

That’s worth it.

 

It made me realise that time is more important than money.

That money doesn’t get happiness,

But rather, getting experiences and doing interesting things.

 

Which brings me to the robots.

They often trade more consistently than I do.

Because they follow my trading rules perfectly.

They don’t get greedy.

They don’t overtrade.

 

I worked out that I probably spend around 6 hours per day looking at charts.

If I just left it to my trading robots and alert systems, that would probably go down to 1 hour per day.

Which means I would save 5 hours every day.

 

If I did that for the next 3 years,

That would be 5 x 260 x 3 = 3900 hours.

Which is 160 days!

 

Ridiculous, I know.

I’m not sure what I’m going to do with all that free time 🙂

 

Image credit: blueleaf.com

Buy USD: Month-end rebalancing flows

buyusd

Yesterday’s month-end rebalancing flows were understandably USD negative, given the recent USD positioning in the market.

They have given us excellent levels to add to USD longs.

The USD uptrend should resume, given the strong fundamentals in play.

Donald Trump’s jawboning simply cannot weaken the USD materially, since he cannot reduce the structural dollar shortage, the $10 trillion off-shore debt or the normal mean reversion of term premia on longer dated treasuries.

How to get the best entry for trades

7650332104_ba20f66e53_b

Using robots.

When you’re watching a price chart, emotions take over.

Robots have no emotions.

 

A grid robot, for instance, enters a trade every 50 pips (or whatever interval you wish).

You set the direction.

The robot enters the trade.

 

That is probably the best way to trade.

And it frees up time to do other stuff, too.

 

The feeling you get when you wake up, and the robots have already made money, is awesome.

Way better than watching a screen, taking profit but always being stressed if you got the right entry and exit!

Top trades for 2017

New Year Sand Beach New Year's Eve 2017

 

1. Long USD vs JPY, CAD, AUD, NZD, EUR

A structural dollar shortage, fiscal stimulus and a hawkish Fed should support the USD.

As US yields rise, long-term carry trades in AUD and NZD will begin to get squeezed.

A stronger USD will put pressure on commodities, especially crude oil as concerns about the OPEC cut may begin to surface. This will be bearish for the CAD and may force the BoC to cut rates.

A strong positive interest rate differential between the US and Japan means that a long USDJPY position should play a core part of our portfolio.

A short EURUSD position plays on the divergence between continued monetary easing and political uncertainty in Europe, versus a hawkish Fed and structural dollar illiquidity.

 

2. Short AUD versus USD, CAD, NZD

A weakening Australian economy, and risks of a stronger dollar strangling Chinese dollar-denominated debt, should continue to weaken the Aussie forcing the RBA to cut rates.

 

3. Short European equities (but long US equities on a significant retracement)

The FTSE needs to be shorted, as any appreciation in Sterling will result in massive bearish pressure.

The DAX looks overstretched near 11,500, and needs to be shorted as a play on rising European political tensions, risks of European bank defaults, and as a hedge on our short EURUSD position.

 

4. Long GBP vs EUR, AUD, JPY, (USD)

A neural BoE, rising inflation expectations, and strong economic performance should support Sterling against the weaker EUR, AUD and JPY.

A long GBP position against USD is the perfect way to hedge any long USD exposure.

Based on FX fundamentals and long term fair value, Sterling is significantly undervalued against all currencies.

 

 

5. Long gold vs USD

This is a hedge against long USD exposure, but more importantly, protects against a crisis created by dollar illiquidity.

Near 1,100, this is an excellent time to start building long positions – after most investors have been caught off-guard, squeezed and stopped out.

 

 

Is selling oil and buying USD/CAD the best trade of 2017?

Dollar strength is here to stay.

Fiscal stimulus, rate hikes, $10 trillion of off-shore dollar debt, rising US yields, dollar index breaking out of a multi-year consolidation.

 

The dollar is inversely correlated with oil.

This chart shows oil (red/green) and inverted dollar (blue):

oil-dxy

 

Right now, there is massive divergence between the price of oil and the inverted dollar index.

This needs to be corrected.

Either the dollar will weaken, or the oil price will fall.

 

However, like I said, dollar strength is here to stay.

Therefore, the oil price should fall dramatically.

 

Oil is correlated with the Canadian dollar (CAD).

Therefore, if we assume oil will fall, the CAD will also fall.

 

Furthermore, the Canadian economy is weak.

The BoC should cut rates, especially after Trump’s victory.

In any case, they will not raise interest rates in the long term.

 

Combining all of this gives us an excellent trade: buying USD/CAD.

Dollar strength, causing a drop in oil prices, causing CAD weakness.

One of my top trades for 2017.