These 3 Charts Interest Me Now…
Between the widely
anticipated jobs data on Friday and New York nearing a stand still
unless you are a Republican Delegate or demonstrator the markets are rather
quiet. Range trading at its finest.
So, rather then try to come up with some trade
ideas in this present market, let’s simply manage our one outstanding position,
short EUR/CHF and look to play Friday’s data as a great way to kick off
the new month and the last quarter of 2004.
It is hard to argue that volatility in the FX
markets was absent this summer. Rather, the sharp, one solid bar movements were
what accounted for the volatility, not the steady dips and rallies as seen in a
trending market. Sometimes you caught the right side of these violent moves,
sometimes you did not. With markets witnessing low volume as well as a market
trying to determine how things will play out as the greatest liquidity boom in
history draws to a close, it is no wonder that trading was challenging. Most FX
managers have been tested this year, you have had to bring your ‘A’ game to the
table everyday.
Naturally, those that understand and embrace risk
management likely chalked up some gains and avoided the nasty drawdowns that
sometimes can accompany a market like this. I for one reduced my risk exposure
on a per trade basis by nearly half the normal amount, as we head into the fall,
I suspect there will be some mean reversion in that aspect of my trading.
Below are a handful of daily charts that interest
me at present, the accompanying macro picture also coincides with the technical
backdrop:
HVT?*
Not a week goes by where I do not get a handful
of emails asking me if I still do HVT trading on the NYSE each morning. The
answer is, yes. HVT was never cast aside in favor of FX, instead, as mentioned
in last week’s article, FX merely became a complement to HVT.
What had proved challenging for me as a writer of
a daily HVT column was that the market had changed so dramatically that a trader
could not rely on a handful of stocks to trade each day. This had been the
cornerstone of HVT, become a master of a few stocks and employ the techniques I
outlined in my book. Suddenly, traders, myself included, were left wondering
which stocks we would trade on any given day, it was hit and miss. The article
boiled down to “rear view mirror” analysis, boring and of little value.
Since then, I have continued to refine my HVT
skills each day and have now reached a point where I feel that there are some
valuable lessons to teach to you on occasion during the week. While I do not
have a specific schedule yet, my daily article, beginning after Labor Day will
touch upon how I am identifying trades each day as the market unfolds before
me. For traders who have felt complete frustration due to market conditions, I
can assure you that there will be some useful commentary that will assist you
greatly.
I look forward to your comments regarding this
“re-introduction” of HVT to the column. As mentioned, it will likely be only
1-2 times per week in addition to the daily FX commentary. Enjoy the remainder
of the summer, but shed no tears to see what has become my least favorite time
of the year.
*High Velocity Trading