The Big Reward

PERSPECTIVE - So we waited to see how the weekend risk would play out in markets and nothing really happened into the Monday open. This is why it's important to let the market tell us when there is uncertainty and volatility that we need to pay attention to, as opposed to letting our own thoughts get in the way. It may have seemed like we would get a wilder reaction considering the US government went into shutdown mode, but the market wasn't initially bothered by the news, seemingly on the expectation that the government would still run as needed and it wouldn't be long before some form of a stopgap would be put in place. But I do think there will be some volatility around the corner and I do think we will get some exciting new trading opportunities. As much as it may be frustrating that there have been no new positions of late, we are having a great start to the year, with January performance already in a good place.

cartoon jan 23

PRETTY GOOD - We also have a great AUDNZD position in play and in the money. So if ever there were a time to remind how important it is to not lose sight of the bigger picture, now would be a good time to do so. There will always be slower periods and it's amazing how even when we haven't had a trade for a week or two, it can feel like we haven't been trading. But +2.80% in January isn't exactly no trading. I say this as a reminder to us all that discipline is critical. I can't tell you how many times I have seen people rush into trades out of impatience. The net result is usually one which has the person out of the money in a big way and wishing they could put their capital to work in the trade they see that has finally set up and what they were looking for, but is no longer an option, given the existing mess they're in. And even if they do jump into the trade they wanted, the focus just isn't the same, which is a shame. I am waiting for that next one and excited for us to jump in, but I am also just as excited to sit back and feel good about the fact that I have gotten to a place where I no longer feel pressure to take a position just because I haven't traded for a certain period of time.

Any trade can look good. You need to wait for the ones that look awesome.

WEIGHING IT OUT - As I scan the market right now, I can see there are many that would love to step in an buy the US Dollar. I get it. And it could happen. But I am always thinking about that pain trade. That place the market will always push because it knows it has trapped many into a false sense of confidence about a premature play into a reversal that just isn't there. The market is super talented in this area. It will rally intensely for a period of time and then it will slow up and start to roll over just a little. This will invite expectations for a bigger reversal, which will suck in shorts that end up helping out the market as the selling just adds enough downside pressure to keep the market from racing higher. Ultimately, these players all line up and jump into the play, at which point the trend rips higher one last time, before that reversal finally plays out, with none of these players wanting to, or being capable of participating in. Again, it's true...the Dollar could rally right now. But for me, it is about feeling 100% confident in the positions I take and the fact that I am just not feeling it yet as far as the Dollar recovery goes (specific reference to the Euro , Pound and Yen), is enough to keep me from taking risk I don't need to take. The market will be there tomorrow and the next day. If I'm wrong and miss it, I'll just get the next one.

FX Positions Pointing in the Right Direction

Portfolio is waiting for follow through. The Friday closes set up an encourag...


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