8th day small profit that helps me to keep going in the competition

After a successful week and most importantly from recovering almost $6k, I wanted to consolidate my positive results. My desire was to build up the account to be able to deal with possible drawdowns.

6B 06/20 future

Monday was a very quiet day in comparison with the previous days. The British Pound jumped 

almost 50 pips early in the morning but after that, the USD recover its strength. This changed again after midday when the price started to rise again.

6B 06/20 trade chart

I realized that I had a notification. My algo bought 5 lots during a retracement. In the beginning, it went against me, but it quickly recovered. It didn’t make a big movement but was more than enough to finish the day with a small profit. I personally don’t like to take positions at that time on the day because the algo closes the positions around 17:00. To be honest, it doesn’t matter if I like it or not, what I need to do is check that it’s statistically significant.  

Profit and new account balance

Trade 13/04/2020

As I said, it was a small profit, but these kinds of days help to build up the account. The maximum adverse excursion was small. The algo closed the position close to the maximum favorable excursion which I’m very happy about. I have the feeling that I’m leaving a lot of money on the table. I am allowed to make one change in the algo during the competition and I’m seriously considering adding a take profit. These will reduce the time in which the algo maintains positions open and more importantly it will secure profits. On the other hand, it won’t let the profits run as much this is why I need to carefully check before I implement the change.

Account balance and realized PnL

The account balance at the end of the day was $1003468.75. Even if it’s not real money, I feel very well because the algo is behaving as I expected and it’s able to recover from drawdowns.

Thanks for reading this post!

6th day, no gain no loss…

As you can imagine after reading the title, it was a flat day. Actually, I made a small profit but it didn’t cover the commissions. Let’s see what happened during that day in the EUR/USD and GBP/USD futures:

British Pound

It was a directional day for the British Pound without any big spike or swings as we saw in the previous days.  This was explained by the increase of COVID-19 cases in the US and the expected approval of further help by the FED.

6B 06/20 

It raised almost without stopping until 14:30 where the price was ranging between 1.2387 and 1.2405. In one of these retracements, the algo was triggered and it sent a buy of 5 lots. I wasn’t sure about opening the position considering its morning trend and range. One of the best aspects of using algos is that we remove discretionary decisions and feelings. After entering in the position, like the most part of the times, the GBP/USD futures fell to 1.2374. After that, it rebounded breaking the highs of the day and it reached the 1.2429 level. It couldn’t breach these levels and it went back to 1.2400 where the algo closed the position.

6B 06/20 trade chart

This chart shows more detailed of what I explained in the previous paragraph.

6B 06/20 trade

In contrast with other days, the MAE ($437.50) is around 1/3 of the MFE ($1281.25) and this shows how well the market behaved for the algo I’m using. One of the problems is that the ETD is still high because the algo is not closing with a signal. Until now, the algo has closed according to the time configured.

Euro FX

The Euro vs the US Dollar didn’t have a clear trend. It was a total swing. It seems that the EUR was stronger in the morning while the USD took its place in the afternoon.

6E 06/20

As you can see, and as it was expected, the algo was triggered in a retracement. It performed well during the first hour. After that, the Euro dropped strongly but seems that the traders didn’t believe in this movement and the buying pressure took the price to the point in which the position was open. At this point, it continued to rise to 1.0909 where the dollar strength came back. The position was closed at 17:08 London Time

Trades and account balance

I didn’t get profit in both trades. I lost $398.75 in the EuroFX trade including commissions and I won $395.75 in the British Pound also including commissions.

08/04/2020 trades

I shouldn’t be upset… I made a profit without considering commissions. At the end of the day is not real money and this is good learning and I would like to remember that in my opinion the commissions and the slippage should be included when you are backtesting a system. In my experience, if the system is not good enough this will make the difference between making profit or loss.

Account Balance

One of the conclusions that I found in the first 6 days is that probably I should implement a fixed take profit or maybe consider a trailing stop. It’s early to say but probably I will run some tests to see if the statistic ratios are better than my current algo.

Thanks for reading this post!

#algorithmic_trading, #Trading, #Euro, #EUR, #GBP, #British Pound, #USD, #EURUSD, #GBPUSD, #Dollar, #performance, #profit, #loss, #FED, #COVID-19, #Robotrader

Headlines of the week, British pound, Brent and Economic calendar for the next week

United States

The most important economic releases this week were the US Core CPI (MoM and YoY) and the US retail sales. As you know both were lower than the market expected and the treasury yields and the USD closed lower yesterday. The US inflation data offset the higher gasoline prices.  Robert Kaplan, Dallas Federal Reserve Bank President said that that the Fed should periodically review its inflation target and other frameworks. I think this is interesting but I don´t know how they can apply it. The economic policy takes time to affect the real economy.

UK

In the meantime, crossing the Atlantic, Mark Carney said on Friday that he expects that the BoE will raise interest rates but he declined to comment when. The biggest headline was that there are rumors that Britain is to be offered a two-year Brexit transition deal. The British Pound jumped as soon as this news was published in the media.

Europe

There is a controversy between  Jens Weidmann (Bundesbank president) and the European Central Bank. He said that there is no need for the ECB to continue providing monetary stimulus through bond purchases.  Mario Draghi doesn´t see enough inflation progress. According to Reuters, the ECB is likely to reduce support but continue to buy the asset purchases.

China

Apparently, China´s economy has shown signs of stabilizing and growing more strongly. If it continues in the second half of the year, the commodities will rise.

GBPUSD Dec 17 Futures

    Source: TradingView, GBPUSD Dec17 futures, daily

As I comment before, the last move has been driven by the possibility of the two year transition period between Europe and UK. We can see the bounce back on Thursday when it was published on the news. Apart from that, it's the second time it closes above the 1.3285 resistance I signaled in one of my old posts. 

Brent Dec17 Futures

    Source: TradingView, Brent Dec17 futures, daily

The Brent rose yesterday and tested the resistance at 57.21. I think it can keep rising the next week due to the demand increase. 

Economic Calendar

Own elaboration                                                                           

It´s going to be a busy week for the UK traders as they have CPI, Average Earnings + Bonus, Claimant Count Change and Retail Sales. In the US, we should look forward to seeing Industrial Production, Building Permits and Existing Home Sales. Tuesday is the most important day of the week if you trade European products.

Sum up

This is a little review about the most relevant things of the week. For now, the markets are moving as I expected and shared in other posts. Let's see what happens next week.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

FOMC, currencies review

As you know, today is the FOMC meeting minutes. This is one of the most important events if you trade fx, US government bonds or US indexes. And even if you don’t trade them, be aware, because the most part of assets will be moving later today.

Let´s start with the interest rate decision.  You can think that this decision doesn’t affect you in your day to day, but this is wrong. It affects to rate that the borrowers need to pay back (mortgages, personal loans, student loans, car financing…), your investments, the asset valuation, the money flow

.

Second, all the economic performance and events that affect the economy are reviewed by the FOMC committee and president of the Fed makes public the economic policy that will be implemented in the coming months.

These are simple explanations to clarify why it’s an important event in the financial markets. If you know how to interpret the words of the FED president, you can make good medium-term investments. For example: if the FED raises the interest rate and they expect the economy to keep growing, one of the most successful strategies is investing in financials (banks, insurance companies…) This is not the purpose of this post.

Euro

    Source: TradingView, EURUSD Dec17 futures, daily

This contract was analyzed the other day. It broke the first resistance at 1.18020. The bullish move in the euro is due to the strong German Industrial Production and the deferral of the independence declaration in Catalonia.  If the Fed sends a bullish speech, we can see this contract going down to around 1.1750.

These are the levels  I published in the weekend:

Resistance 3	1.20965
Resistance 2	1.19550
Resistance 1	1.18020
Support 1	1.17235
Support 2	1.15460
Support 3	1.14435

GBP

    Source: TradingView, GBPUSD Dec17 futures, daily

The British Pound has recovered a little bit this week. If we see the news around the UK, we can think that the pound is really high and it should fall. Europe is putting pressure on the UK. There is a substantial probability of a Non-deal Brexit, which would be bad for the GBP. In the other side, we have a strong US economy. I think Yellen will clarify the effects of the hurricanes to the US growth. I think we can see the GBPUSD between 1.3100 and 1.3066 in the coming days.

Important levels:

Resistance 3	1.3615
Resistance 2	1.3283
Resistance 1	1.3153
Support 1	1.3066
Support 2	1.2952
Support 3	1.2848

JPY

    Source: TradingView, JPYUSD Dec17 futures, daily

We can see a bullish trend in the dollar. The shade highlighted in the chart show how significant is the 1.1257 level. I don´t see strength in the JPY movement this week.  A hawkish message can help to consolidate the price between 1.1343 and 1.1257 (0.88160 and 0.88160 in the chart). 

Resistance 2	0.88160	1.1343
Resistance 1	0.88835	1.1257
Support 1	0.89905	1.1123
Support 2	0.90945	1.0996
Support 3	0.92225	1.0843

Trading the FOMC meeting minutes is really difficult. You shouldn´t only consider the interest rate decision. The FOMC minutes can provide you an idea of the path to follow in the coming months. If you do intraday trading, you will see the liquidity disappear and big swings in the prices due to how the traders or algos interpret the message provided by the Fed president.

Have a good trading!

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved

Technical Analysis of EURUSD, GBPUSD, USDJPY

Let’s check the most important levels of the main currencies. We have seen a strong dollar during the last two weeks.

Euro

    Source: TradingView, EURUSD Dec 17 Futures

We can see that the dollar has been rising in the last sessions. The US macroeconomic data is strong and the FED officials confirmed that they will keep raising the interest rates and they will start to taper the buying of government bonds and other assets to support the economy. On the other hand, we have Europe, which has improved a lot since last year. The weakest leg is that European inflation is not increasing as the BCE would like. I can see a strong resistance around 1.17235. We can see the shade created on the Friday´s candle. If it fails to break this support, it will look for the first resistance at 1.18020. These are the levels I consider important:

Resistance 3	1.20965
Resistance 2	1.19550
Resistance 1	1.18020
Support 1	1.17235
Support 2	1.15460
Support 3	1.14435

GBP

    Source: TradingView, GBPUSD Dec 17 Futures

The British Pound has suffered a big fall since the double top in the middle of September. As I comment before it has been driven by the strong US macroeconomic figures. I´d like to add that Kevin Warsh popularity is soaring a he can become the next FED president. Considering him as a hawkish, his election will boost the USD. The UK is negotiating the Brexit with Europe, this can add uncertainty to the GBP. This contract has broken the 20 and 50 EMA and it’s near the 200 EMA. Maybe this is not relevant for trading but it´s one of the things that the people look at. These are the levels I’m looking:

Resistance 3	1.3615
Resistance 2	1.3283
Resistance 1	1.3153
Support 1	1.3066
Support 2	1.2952
Support 3	1.2848

JPY

   Source: TradingView, JPYUSD Dec 17 Futures

This is one of my favourite currency pairs. It moves really well according to fundamentals and technical levels. I expect that the USD will raise vs the JPY. It´s above the exponential moving averages and fundamentally is strong.  I would be surprised if the price goes back to  1.12 and then looks for the 1.1340s level.

I´ve quoted this contract in JPYUSD instead of USDJPY, this is why I’ve included two columns with prices:

Resistance 2	0.88160	1.1343
Resistance 1	0.88835	1.1257
Support 1	0.89905	1.1123
Support 2	0.90945	1.0996
Support 3	0.92225	1.0843

Have a good trading.

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved