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 šŸ™‚

 

Image credit: blueleaf.com

I just discovered how to hedge currencies…I think I’m in love

hedge

That’s a nice hedge

 

Honestly doe, I think I am in love

In currency trading, I used to hedge risk by trading multiple currency pairs – but I would only trade the majors.

The majors usually include USD.

And so I would usually end up with a massive net long or short USD position – and any small fluctuation in the dollar would present a big risk to my account.

 

Yesterday I had an awesome idea.

Why not hedge out the USD risk on these majors positions, by trading cross-pairs in theĀ oppositeĀ direction to the other currency in the USD pair?

 

So, say I’m selling AUDUSDĀ on the basis ofĀ monetary policy divergence between the RBA andĀ the Fed.

To hedge it, I would buy AUDJPY.

This effectively eliminates AUDĀ risk in this position.

Furthermore, it hedges out any dollar downside because if the dollar falls, it will be because Fed hike probability falls. Thus equities should rise, prompting a sell-off in JPY and a rally in AUDJPY.

And since we expect the RBA to remain on hold anyway, AUDJPY should appreciate. It gives us some nice carry too.

 

Another example: say I’m buying USDCADĀ because I think the Federal Funds Rate will rise in the near future.

To protect ourselves against this short CADĀ position, we canĀ sell GBPCAD.

This is because Sterling faces the risk of Brexit and further rate cuts – CAD doesn’t face nearly as much risk, and it gives us a nice long CAD trade if oil decides to go up.

 

 

To put it mildly,

I’m frigging excited with joy about some stupid currencies.

Such is life