September Comments

Managed Account Report

The first two weeks of the month were quiet for me with a steady decline into a drawdown of around 14%. markets were consolodating and doing nothing really.

The woes of the Sub Prime mortgage fiasco changed all that in week 3 with the virtual collapse of Northern Rock (NRK). Britains 2nd largest mortgage provider.

same old story as before, they were suffering liquidity problems all because of these clever American companies who thought it would be good to lend money to people who had no chance of paying it back.

Northern rock suffered first because mortgages were just about the only sector they were in - others have insurance business to fall back on. The bubble burst when the Bank Of England blew the whistle and told the world they had extended credit to NRK as the 'lender of last resort' - basically the death knell.

This of course caused widespread panic in the money markets this side of the pond.

Strangely enough I didnt make that much from the NRK effect but it did jolly up the markets enough for us to turn a healthy profit by month end.

The Coming Month.

I'm predicting yet more shocks in the market, in fact I think this sub prime effect will last into the new year - which is great news for us, bad news for the banks and hedge funds.

My methods thrive on volatility and we have that in spades at the moment, bring it on!

September Results:

Increase Percentage: 20.2%

Individual accounts may vary based on client’s comfort level of risk

The monitor account updates every hour and is live for the current month - you can see the last update time in the top right corner Have a look at it here

Please email me managed@simpleforexsystems.com for full details should you be interested in managed accounts.

August 2007 Comments

Managed Account Report.

August was unusually active. One week of this month was an anomaly due to the shocks in the sub prime motgage sector and it’s good to see an interesting August (a month usually devoid of strong trends due to trader holidays)

At a time when many were losing money hand over fist the small trader had an advantage. A hedge fund or bank cannot just dump a position in which they have been building for many months. It’s not easy to drop some billions into the market without it dropping like a lead baloon.

Smaller traders have the advantage in these moves as they can get in and out at will without the disadvantage of having to unwind large positions. Remember, when banks and hedge funds are losing money someone is always on the other side of those trades.

The turmoil in week 2 resulted in a drawdown bigger than expected along with a profit bigger than expected – rather strange to have both inside a week. Please note though that the figures for drawdown are misleading this month as when I was in drawdown on closed trades I had open trades of twice the drawdown level in positive. Therefore my system shutdown level of 45% was not initiated.

The longer term trend following aspect of the programme had great gains followed by a significant drawdown, whilst the shorter term trend aspect had massive gains previously unseen.

All my previous personal records were broken this month:

• Biggest ever single trade – 1287 pips AUDJPY
  
• biggest day 3531 pips on closed trades,
  
• biggest week 4480 pips on closed trades 13-17 aug 2007

Clearly I do not expect this kind of performance every month, but once every three years or so this kind of situation presents itself. The last time this kind of action happened was in December of 2004. And I was ready for it then too making my previous records of 485 pips in a day and 1856 in a week. Now smashed.

The Coming Month:

I see September as continuing the volatility and with increased risk. To cope with this my leverage will be reduced to protect assets from large swings into drawdown.

I have also initiated a new limit on exposure. For this month I may have a maximum of three positions on any single currency – so for example three yen trades, three usd trades etc – think about this – what this means is that usdjpy is 1 usd trade AND 1 jpy trade – this will limit my exposure to risk.

as for the fundamentals, well think of it this way - the fed providing liquidity and cheap loans will not in any way change the fact that hedge funds and banks aroiund the world are overexposed to debt from the sub prime sector. it may be just a temporary repreive.

On saying that all this debt exposure could just be rumour - and we know what rumour can do - sell the rumour and buy the fact.

In reality I don't give a toss about news items or alerts. If the market moves I will be moving with it in whatever direction it goes. If i am the wrong way around then i will soon be shaken out of the trade and going the other way. Thats what we trend followers do, we don't predict or make the trend we just follow it.

August Results

Increase Percentage: 128%

Individual accounts may vary based on client’s comfort level of risk

The monitor account updates every hour and is live for the current month - you can see the last update time in the top right corner Have a look at it here

I currently have only four places available for managed accounts. Please email me managed@simpleforexsystems.com for full details should you be interested.