6.29.2010

6 months of living

Having now been pursing my chosen lifestyle for almost 6 months, I'd like to offer a bit of self reflection. What has this pursuit enabled me to do, and by consequence, not do?

Having freed my time, I still find myself quite busy with the pursuit of hobbies. I now cycle over 100 miles every week and ride my bicycle every day. Bicycling more has been a desire of mine for sometime and indeed was a huge motivator for moving to a warmer climate. In addition, I was able to "accidentally" experience the joys of going "car-free" for over a month. My car broke down, and I resolved to fix it, but had to wait for the part to arrive. The car is now fixed but the lesson remains. Unless I'm going on a long distance trip, the car sits. All my day to day activities, errands, shopping, etc are now done by bicycle. I'm much happier for it. Of course if my plans for doing some long-distance bicycle touring come to fruition I wouldn't need the car for the trip across North America.

In a similar vein, I have begun spending time with family, finally growing my own food via a garden, and pursing my goal of contributing to open source projects! The interesting thing to note is that none of these actually involve trading. It seems my lack of focus on trading has made me a better trader. I've had my first profitable months ever manual trading. I attribute this to most of all dumb luck (haha), but also to being patient and in some ways trading on less information thereby filtering out the noise. Shockingly these last few weeks have seen me really busy on non-trading things and I must confess to not knowing what the euro or other currencies are doing everyday. It's freeing to think I don't have to worry about how my trading is doing every moment of the day. I am no longer living or dying by my NAV. Further because I trade at a sane leverage (2:1 or 3:1) I literally am not making or losing fortunes on an interday move. This is a stark contrast to my first week as a trader. I had huge NAV gains (and losses!) on as little as 10 pips.

6.16.2010

Forex Market Participants

Many traders are interested in the big players actions. They assume the big players represent the 'smart' money or that perhaps they are more informed. This may be true in the case of the stock market. However, in the case of forex I don't believe it to be true.

Take the classic example of George Soros and others versus the Bank of England. Or the Tokyo housewives of Japan shorting the yen despite the governments large scale interventions. Clearly the big players paid dearly in these cases. Nevertheless, the commitment of traders report acts as a weekly guide of big players for currencies. Since forex has no central exchange, it's impossible to get any such report directly for the forex market1. However the futures and options markets for currencies do have a central exchange and therefore a report. It is published weekly by the CFTC and cane be found here:

http://www.cftc.gov/dea/options/deacmelof.htm


1. Even if trading forex on an ECN, we're really only interacting with a subset of the overall market.

6.14.2010

Move #2 Complete

On a personal note, my second move in 6 months is now completed. Same state, still beautiful and trader friendly. However, I am now closer to family who I've begun spending more time with. Paradise is meaningless if experienced alone.

6.12.2010

Thank you Mr. Trichet

So the past month has seen me busy with manual trading again. Since my last post about shorting the Euro, it has dropped 15 cents or so. I've been along for the ride at several points. This past week we finally saw the first real response from euro bulls to support the currency and keep it in the 1.2x range.

With that, I can say my account grew over 40% during the month of May. This is simply unbelievable, given my low leverage employed (typically 2:1 or 3:1). My post on profit and the mob seems to fit well here. The market participants agreed with my thoughts on the euro and became net sellers for the entire month.

By the way, my thoughts on the euro are less certain moving forward from here. Although I don't believe the sentiment has changed, it may very well have all been priced in at this point. If you'd like to venture a guess, open a position :-)