Forex Hedge Projections and Predictions

July 9th, 2015

I am just runnign forex notes here at the moment because I have had to accept the model I have been working off that I was so confident in, has not delivered.

I accept this is mainly because I took some massive deviations when presented with challenges, and I was haphazard with my hedging being that I was inexperienced and was still testing my ideas in a challenging live environment.

What have I learnt?

You have to be dispassionate about the market and how your system tackles the inherent uncertainty. You are foolish to not read the news, but you are equally foolish to believe it.

When the Euro dived off what I thought was the map, I was so afraid it would continue to dive that I hedged recklessly, despite knowing that generally the harder the spike, the harder the bounce – however in a spike, you never know where you are on that curve.

My belief that the euro would resume falling was informed by the certainty of the news, and yet, it rose to just about the edge of what I perceived it could realistically bounce too after reading doom and gloom.

I did not think that 3 months later I would have spent weeks and weeks above 1.10. That was not the outcome I was expecting. And yet even if I had played it differently, it only means I would have caught maybe a grand or two profit as it withdrew – marginally better off albeit, I’d still be where I am.

When I began increasing my margins, I bought a lot of australian, especially vs the pound and euro, and those positions got destroyed. Just the AUDGBP alone has cost me thousands – huge reckless position placed only 6 weeks ago are costing me $140 each, they are 4% away now, huge mistakes. These are the testaments to our mistakes now, again we believed the resistance would hold, but when it broke, it fell apart completely.

But what about the numbers? What have we learned here?

We’ve learned that as a margin spreads out and ranges push them further apart, the deficit really grows. We were pushing out new ranges, and seeing new possibilities for worst case debt projections.

Our initial projection was to have 600k on the board and never run more than $60k debt. Now it’s over twice that, but so much of it is hedged, so I assumed I could build up from that base of hedged debt.

But it wasn’t perfectly hedged. I binged on the US dollar when I was in trouble and desperately needed to hedge but then over the course of a couple of months the reversal began and the tide went out on me, and my USD pairs became wedged precariously at a point where they would not fall but hung dangerously on the edge.

Although it’s the falls in the NZD that I have counted in again and again, I think we have to see the AUDGBP disaster as the latest chapter of the process of having my range pushed out again, requiring again more margin to fill out to get the same result, and of course always carrying and extra few grand of debt than I could have expected, however, each time we push out the range, it becomes much less likely it will happen again. It will happen again, but it’s less likely to be sooner, and we may be better prepared to absorb it.

At some point we must get past $15k, at which point we will try to add $100 margin – $50k – with every $1k of equity we add so that we’re somewhere around $3500k

But every $50k probably carries the potential for $3k+ loss even when hedged properly, or $5k+ if the hedges slide to the edge. On my journey to $3500 margin, I could easily find myself flirting with $105k debt. Yet it would clearly take weeks, and this is the move to $2k. Could I make $15k before positions swing 5%? Since it would take weeks to build up an extra $500 margin, and weeks to collapse $10k of equity with decent hedges, we’d have to assume it was possible, and that equally, getting to $25k equity would allow for us to add yet another $500 margin.

at this point we’ve added another $50k to our boards on each side of each pair. $100k to the full spread.

4 out of 6 of them are already under $200k, 2 of them are under $150k, but that margin will still be spread out over a smaller area than the current one is. and placed with more care, and so a doubling, to $1400 – $3400 will happen, and then a tripling, $2100 – $5100 and that’s where we want to be by early next year.

It’s just so hard to project what it will be like until we get out in the clear again, and that’s when we’re solidly touching near $14k equity again.

Here is a breakdown of the pairs and where I see the strategy consolidating.

AUD/EUR: 80 vs 49 – we could push to 75k a piece, but we want to keep the euro side down, the carry is a shocker. So it’s more like 75/65

AUD/GBP: 102 vs 12 – same set up I would say as above, but favour the australian even harder – I don’t think it has as much room to run as the EUR pair.

AUD/USD: 90 vs 87 – so we’re holding the 90 balance hoping we can clear out the australian side and roll the $120k back so we can settle it closer to 79 rather tahn 76.5 where it balances now, but like the euro, it depends on what the aussies does once the US gets stuck in, for theres little chance of it going above and staying above 80 to last long term.

EUR/GBP: 115 vs 40- 100 balance. Having successfully dug out the hedge at this point we are looking to fall back and set things up, we can lean in and se we head out. Good model here.

EUR/USD 155 vs 237 – as described, the euro will be at $200k by 1.05 or 1.15, ready to defend, this is the art of hedging.

GBP/USD: 73 vs 147 – i believe when and if the USD comes back we will do well and this really is about keeping the balance we can do 110, we can do 120. we’re at 1.57 now, between 1.47 and 1.64.

We will now have $15k to add to each pair but where will that go down? I’m not confident on anything really right now, I least confident in AUD and NZD but they have the best carry by far and so it evens out. Euro still has the worst carry and much uncertainty. So I favour hedging first.

It comes down to the model.

If having a $2500 margin spread can get you into $80k+ worth of debt, then a $5k spread, you have to be ready for $150k debt, ready for another $60k debt to carry, so even at $2k a week, that’s 30 weeks before you can take that kind of risk BUT it suggests you run the whole spread, when in reality, those places where the euro is high and the aud is high and the usd is low, well, we’re not going back there. It’s more like $30k debt to carry, because we won’t be carry it all across the range.

***

Another setback. Each of these recent setbacks are just making the hope of clambering ahead to a better position further and further away.

The situation with a number of pairs is that if I continue to be pushed I will have to return to full hedge, which means effectively choosing which side it will swing, and now, having a hard hedge up against it.

More hedging means more money down. More money down means higher carry trade. Risk is bubbling up and I need to ask questions about where the real dangers present themselves to me.

40 AUD/EUR: 87vs 47 – I still don’t want to hedge this. It’s rotten carry. If we support the euro, add to gbp as well.

77 AUD/GBP: 109 vs 32 – On the edge and causing me big problems, I will have to build the hedge while hoping it backs off sooner rather than later.

71 AUD/USD:102 vs 31 – so now we’re on the edge, we have the hard decisions to make, but we know which direction its tipped to take so we must hedge to protect ourselves. Time for bigger numbers

77 EUR/GBP: 114 vs 37 – leave room for the euro jump, then stack it in for the dip buy.

68 EUR/USD 163 vs 231 – here you can see already we are forced to hedge to heed off uncertainty. When you reach a risky equity level, you must protect it.

In fact it becomes indicative – what if EUR jumps to 1.14+, I have to hedge in, jumping above $200k, then i get caught, and it starts heading down? I have to go to $300k on the US side, then it turns again, but the money is closer this time so it’s not so dangerous, but I’m sitting there with $500k on one pair – only $100k more. that’s $200 margin.

We still have to be careful and run a line from 1.11 because with the euro it is important we get out.

But the gap means it’s less of a risk and in itself counters the EUR/GBP they both have a 75k gap.

52 GBP/USD: 92 vs 144 – This is a critical pair because when the US begins rising, we want to see gains, we want to see our unhedged gaps tip back. this is one we’re waiting for, but it is also tipped to really drop long term, so there will be times where the US will go back to how we’ve seen it, huge hedging moves.

Now I can see that 3 of my 6 pairs are on the edge, no wonder I am feeling under so much pressure.

But also I’m seeing how in the last 2-3 weeks I’ve taken on the hedges or big positions that were poorly placed on AUD/USD. EUR/GBP, and the far side of GBP/USD, we are waiting for all those pairs to come back, and other than the last one, they just might not,

The pound rolling over the aussie has caused me a lot of pain, as it has jumped 6c without me really being able to hold onto any big gains the other way. I believed I had the depth to soak up a winding down of exposure on the british side, and I got stung badly.

WHAT WILL HAPPEN?

The euro will continue to drop, the USD will continue to rise in the longer term. At the moment the GBP is stronger and the Aussie the weaker, sometimes even weaker than the euro, but over the months, as we’ve seen, the euro will get weaker and fall into definite last, and then the australian will catch up and overhaul the

We don’t want euros. expensive and going down. We can’t really risk aussie now, but when the signs are there, go in. We can’t really risk GBP, we buy the dips but we’re held here in position. With USD, we can’t buy unless we see the move.

So when euro drops we make money on the usd, but the euro holds against the gbp, and the gbp goes down against the USD, and the Aud has already sold off against the USD, so it hold against the gbp, or even gains some, and teh aud gains against the euro.

But we can’t buy any of this because the USD isn’t rising, the gbp isn’t falling, the aud is still falling and the euro is definitely refusing to budge thats where the problems has been.

More on Forex Strategy and Hedging

June 30th, 2015

Now I have to have a really serious look at what I am trying to do with my trading.

It has been very frustrating recently having not made much progress, and having placed far too much faith in predictions I loaded up my USD side very hard, especially against the EUR given all the fundamental issues facing the eurozone, but of course the big correction came, and then the greek drama took centre stage making everyone hold awaiting that outcome and it has possibly restrained the kind of volatility I rely on as we have waited weeks for an outcome.

The euro is bound to come down, it’s just a matter of whether there will be a greek deal and it will bounce up first.

We now have to accept that many of the calls we made were very poor in that I did not manage those choices in a way that my system could withstand.

The first poor call was assuming a currency would not move more than 20% in a short period of a few months without some major global event. I did not see that the euro was already on a course hurtling down and by the time I got wise to it, I did make money and refine my methods but the sentiment had already begun to change.

The second poor call was going to far into dangerous hedges believing that I knew where the market was going to be based on every insistence from every source that the euro would dive to parity with the US. Now I have learnt, no one really knows how things will play, and hedging is all about short term protection at the cost of long term gain.

But we can’t forget we chose hedging as a way to save our system when the parameters became pushed which is what happened in each of those situations.

But I can’t help but feel I have more to learn about hedging, but now I also have a healthy distrust of my own confidence in trading now that I have seen how dangerous it can be.

I was actually pretty conservative on the kiwi. But again, just the kiwi pound has collapsed 19% in 2 months. I only had $5k on that trade, so in addition to the canadian, neither of which I hedged this has become an additional issue as now that the kiwi has tanked, it’s cost me $2k of my equity and the timing of that is all part of why I am so stretched.

It’s my legendary misfortune. I think I have bad luck because it’s a message from the universe that I am supposed to use my strategic ability rather than rely on luck, which I don’t have!

Unfortunately because my choices were so poor, I will have to enter into more hedging which will again push out my timetable for actually achieving some progress. But it will protect me and allow me to continue to make some cash.

I was aware of the danger that I was creating but my assurance was that if it ever got that bad I would simply hedge on the other side. Could it lead to massive balance hedges that could topple me with the smallest swnings as the both tug at my equity from both ends until there’s nothing left and I am pulled apart by two wild horses like some macabre torture?

However I have been thinking about what I should have done differently to protect myself and that is counter hedging immediately. Don’t wait until youre at breaking point on the other side.

This is where we can use a technical level. Don’t go into hedge mode until that resistance level is crossed, and buy in as it cranks up, sell as it winds down, especially as it touches the next technical level. If it pops the break, start again. Paying attention to technical levels will be another good way to make decisions when you’re riding a rally.

If I’d done this with the euro, basically waited for it to pop 1.06 and then start throwing in the hedges, and if I had kept it rolling I would have made thousands of dollars. But what if it turned around again?

You build it on the other side again, ready to roll out twice as large. The point being is before, you keep the numbers equal, no matter how high, and you choose your moment to start rolling off

As time goes on we are learning the patterns of the market, how break outs work, they’ll break and start pushing the ceiling, and then cool off, they may have a number of tries scratching at the ceiling in a day, each one lasting a few hours, and then they might chill out and try again tomorrow. Or next week.

You could have this $50k slab just sitting there at the end of the opposite side of your hedge. As your price action finally corrects you reduce it slowly from $50k. You could even do it in intervals to show the counting down process.

The idea of a $50k trade like this is that when it breaks out, you grab the tasty $50 profit, and replace it with a $20k, which you would then replace again with a $40k to make sure the trend was extending. again it would be the same on the other side. The $50k goes bad, drops $100 that is .2% then you put $20k in on the other side, if that breaks through, then you go with the $50k hedge on that side.

The assumption is that when you’re riding a hedge, it’s spiking up to new highs where it will eventually have to climb down and retrace at some point. When you’re fairly sure it has exhausted, you start building the hedge on the other side immediately. Yes the hedge may kick a new high after that and damn that will hurt, but you should already be past the big spurt and it may dwell up in this region for weeks and months, but another big spurt is probably within a 10% chance, and youre hedged up well anyway. Part of hedging as we first saw it was to then turn around and use the profits to pull out some dodgy looking positions that got left behind.

So what happens is the price point gets trapped tightly between two hedges.

You may have $150k on the long side but still a $50k hedge on the short side hanging at the edge of the high, when it breaks from the consistent swing up, thats when you roll a $10k and then a $20k hedge break, and once that breaks youre probably safe to top out at $50k. These will pull in decent profits.

But eventually it turns to go higher again, but here’s the deal. We got $200k rolling down on $50k, so once again, you turn in the $20k position. This is where stops to break even might be a good idea.

The key thing about hedging within tight ranges is that one side is making bigger profits than usual, even at a point where equit is being eaten as we lean to the far side.

Once the counter hedge kicks in, the other side is making equal losses, but those losses aren’t that unusual, it’s just a big tail when it’s the big head that’s causing all the problems, the grands worth of losses.

At some point it’s going to start coming down, and it’s at that point the big hedges coming in on the other side start being collected. Pretty soon youre 75k/225k. You will throw up the $20k on the $75k line, but that’s because you’re holding $200k all the way down to $100k on the other side, that’s when you start leaning toward the $125-$150k split.

Keeping the split number down is a sign of your judgement as every time the hedge goes the wrong way, it will rise on both sides.

Of course trends must be considered also, it is the euro and aussie tipped to sink long term while the dollar and pound will likely rise over time.

CASE STUDY

GBPAUD. We should have held $30k while grabbing $10k positions, the moment it turned around on the 90k, bang, counter with another $10k. What you eventually get is a big say $10k slab positioned as the gateway, perhaps at a point around $200 where it’s fallen to but gotten up again and again. As soon as we pull away, the $5k counter comes in. If it falls away, you take the pain knowing that the $5k’s coming down should give you some nice hits, and if it approaches again, squeeze it so if it pops either side , , ,

It has popped again and I have risked some counter hedge positions, but I’m not confident leaning over the edge, and have now wound down to $113 vs. 18k, that is a $95k difference – huge. This suggests huge confidence in me that this is topping out, but I will look for 40k vs 90k though with australian pairs we should always keep an extra $10k at least on the the australian side for carry.

Use carry to determine how much you carry.

EURUSD. When the USD starts dropping get some big wedges in behind it, but the moment it turns, drop the $5k hedge right there like we should have done from the top. Sure, collecting $5k hedges on the way down will hurt, but we will end ip rolling some big numbers on the US side.

Now I am more doubtful, considering that the euro could spend a year or more under $1.05.

But everyone seems to have a theory – so many big names are insisting on parity at some point. But then so many people keep saying that this is what the big players want us to believe, the euro has seen it’s massive decline, it is now the US faltering, and we’ll see the euro rise up where it belongs, and after that who knows, if the US data can’t recover we may have already seen the bottom.

***

So please tell me again, the story of how all this works out?

Well whether it takes weeks, months or happens tomorrow, the USD will rise again, pushing me well over $15k and towards $20k, at which point I will be adding to my lots to over $3k margin, but always weary of where I am keeping my hedges, I want the hedges to balance at halfway.

If it stops after 1.05, we may look to settle the hedge around $200k, but going to parity, that may be $250 on both sides, while after parity, we begin winding the hedge down.

My assumption is we would be well into at least $18k by then, hopefully 20k, though going to 20k equity is going to surely encourage a bit of adventure

The facts are that I may not be able to lift my earnings significantly without really hedging in, and so that’s why the $20k level is so important, because it’s at that point we get to be more daring.

But it also may leave me asking serious questions about which way these currencies are heading and therefore, we have to go back to our own fundamentals.

You hold a hedge to keep the balance so you’re alway safe no matter what happens. How we space out the money we throw down depends on the technical ranges and the price movements, congestion forces you to throw money down, by break outs allow for clean outs.

It’s only when you get to the edge, the last quartile, that you begin to wind down the hedge so when it finally tops and reverses, you’re holding little more than 10% on that side. Whether you have to hedge and how much always depends on how badly things are going. New highs will become harder to come by, and that’s where we’ll claw it back.

Forex Update 2015

June 19th, 2015

FOREX UPDATE 2015

Progress has been slow, there’s has been promising, but unsustained upswings – no real concrete evidence that bigger gains can be maintained week on week. But the breakthrough must come and it must come within a year. I just feel really doubtful because currently I have no model for when this is supposed to happen.

I believe that as long as profit is steady, and your leverage is steady, you don’t borrow more, your profit will eventually top up your equity so you are moving forward.

The key is not to increase leverage chasing bigger gains only to end up with bigger losses that your equity can’t handle which is where I’ve been having trouble. Gains are steady but small, losses are prolonged and sustained.

I understand that my losses have increased because I have distributed more margin amongst the range. All my euro ranges have gone to new highs, and whereas once I had filled those ranges with tiny little 111’s now I am filling them with, 4, 5’s and 6’s. The range between 1.10 and 1.14 is now filled with another $10k worth of positions. Those positions lose 5%, in NZ$ that’s costing me . . . another $6-700 which is all I made some weeks last month.

The main margin has been spent adding to weak AUD positions, which also have at least $10k if not $20k added to them. These only moved back 2% and the aussie exchange rate is more forgiving but that could easily cover a grand. Then you add my losses on my canadian and NZ side which aren’t hedged, well that’s a cold unhedged $1500 loss. You are tabbing up over $3k losses when in the last 3 weeks you’ve only made about $2500.

So this explains why the euro has come off a peak of 1.146, the following 2 weeks I have made very little, the euro only went as low as 1.086 – still a 5% range which is incredible to be covering back and forth in a 3 week period, all through that I would have been adding in euro positions and USD positions, 17th may to june 4, I covered that range, but added a whole lot of extra margin that wasn’t there.

In the same space euro aud has gone from 1.42 to 1.39, and then jetting from 1.39 back to 1.46 which again is 5% move where it’s collected a lot of baggage as it headed down.

So basically you’ve been screwed by the bounce finally escaping gravity, but in the USD case, it is once again the worst case scenario you could have predicted under your current strategy.

I knew coming down, there was more euro now, but now it’s gone up again and I’ve done it on both sides!

Euro goes to 1.04, massive hedge build up there. Then up to 1.14, big hedge build up there, then down to 1.086, hedge there, and now gone back to 1.136, hedge there, so we’ve been trapped into building all these hedges as the range consolidates, and although it’s not so dangerous because you’re hedged on both sides, it does feel precarious, as these hedges soak up your equity.

Eventually there will be a break out, and you can pick your top or trail out, and a new risk presents – pick your moment to leave the party correctly and you’ll make money on both sides, but if you leave to soon, you’re going to get caught in the rolling tide and you’ll need to get back in at a worse spot to cover your butt.

When you’re on the edge of the hedge, mistakes are so much more costly. But that’s on the outside. What I am learning now is that there are problems on the inside too but they are within limits.

I have a strategy. My belief is that any run on the euro, especially now with good USD reads, will be very limited, the euro will fall against the USD, GBP, and AUD – there it is right there, first euro rally it smashed the dollar, this time it was all three suffering in positions where all three can advance and regain all those losses to bring my equity back.

What this is saying is when the euro drops, I’ll take back decent equity across the board. 5% of $150k is of course $7.5k.

If and when that happens, you want to hedge to protect your gains, especially to me $20k equity seems like a place where we’re not only safe from danger, but able to crank more margin out without a short term risk

But you were talking about adding $200 margin for each $1000 equity, when 10% of $100 leveraged 1:500 is $5k – you’re allowing enough equity for a 1% loss, which is madness, we’re experiencing 5% shifts in just a few weeks, when to have a safer position in terms of returns to protect our equity, it would have to go up and down that 1% range 10x before breaking out in order not to cause pain.

This could be pretty grim but for one thing – as it goes back and forth, it is still knocking out the stops in the same range, meaning that money can be recirculated – the bigger the amounts, the bigger the profits, and the more money going back into the system, proving what I am saying, that it will break out at some point.

I have reached this position by constantly underestimating how leverage pulls the rug out, but as we swing back and forth, I get to get that rug back when returning to the secene.

Basically if I chilled conservatively for a few weeks focusing on always putting down less than I picked up, slowly the equity would reemerge. Even if I plateaued, it would still happen more slowly, and I would still generate profits, but it would be at a steady and reduced rate, rather than the attempts I’ve continually made to increase profit by increasing margin leveraged leaving me vulnerable.

It’s the fact that the margin I have added has been spread up and down preventing me from using that to make more money in a thinner range. It won’t be until we have that level on the full range we’re on can we expect the weekly earning not to fluctuate downward.

But now our margin is $3k and our earning fluctuate between $700-$1500. When we first go to $3500, it will lift income to $1000-2000 at first, but within a few weeks that will boil down again to say $800-$1800, but within 4 weeks I’ve made another $6-7k allowing me to step up to $4k margin, and again, for a few weeks I earn $1200 – $2500, but then, I slip back to $1000-2000. That’s how it rolls basically.

Slowly the amount you acquire over that month or so consolidation grows bigger and can slowly accomodate more than $500 margin and what’s more, you’re squeezing ever more into the same range. Big moves wipe out a lot of dominoes, at which point you won’t just jump back in with the same money, and it’s those points where you consolidate.

I have now made another startling discovery about my trading. The “carry” or “holding” costs for different brokers are completely different and only loosely matched to central bank lending rates.

CARRY HOLDING INTEREST RATES

I was shocked to discover I was paying interest on both sides of many pairs that had close interest rates.

I finally made an effort to check because I noticed that there wasn’t one single pair where I was holding more on the side with the higher interest, and even with all my NZD and turkish pairs I had bought specifically for the interest yield or carry trade, I was still paying a holding cost. How could this be?

Now I know. Most GBP and EUR pairs are a rip off on holding cost which made me realise my broker was profiting from the interest I pay, so therefore easily stinging me for $300 a week they were scooping off my trades when you add the interest to the commission. No wonder I get a call for a chit chat every few weeks, I’m making them good money!

Actual Carry rates

USD/GBP: -1.3
-USD/AUD: -2.934
-USD/EUR: -.576

-GBP/USD: -.709
GBP/AUD -2.644
-GBP/EUR: -.286

AUD/CAD: +.231
AUD/USD: +.880
AUD/GBP: +.578
AUD/EUR +1.304

EUR/AUD: -3.376
EUR/GBP: -1.745
EUR/USD: -1.442

-CAD/USD: -.394
NZD/USD: +2.601
NZD/CAD: +1.951
NZD/GBP +2.298
NZD/JPY +2.745
NZD/EUR +3.024
TRY/USD +9.557
TRY/EUR +9.880

***

NEW FOREX CHALLENGES

The final chapter has come now with the rise of the pound against the US and the euro against everything, the euro now smashing me against my big pound hedge and the aussie which also has a hedge, the pound smashing me against the aussie, and finally the ass dropping out of the NZ dollar which I used for carry trades to keep my interest costs down.

The NZ drop has wiped over $2k off my equity which is bizarre since I can only count $700 losses on the NZ crosses. Again it just makes me feel like with the new information I got about the carry trade rates – what is going on that I can’t see why I can’t seem to win?

Suddenly a big aussie jobs report drops and I win $1k back. It’s now bad, but not over the edge. I was so relieved.

It was feeling like a write off of a day. But I went for a run, I’ve been running every day. Now I feel great again. Maybe I should run first thing.

Suddenly it seems straightforward. My trading plan will win in the end, we just don’t know how much sacrifice it will take. That’s what it just keeps coming back to, how long will this all play out?

What is the new worst case scenario we have to face? There is no way we will ever let our equity go screaming into the ground.

What if we can only earn a grand a week for the rest of the year? Surely, surely after adding another $25k and going to $110k surely we’re not going to get this same situation where the equity continues to drain away? It seems apparent I will have to cool down yet again. But really all of that could change if the US started pumping and the Euro sinking, and that could take months also.

It seems obvious now I was as wrong about the hedging as I was about the euro plummeting in the first place. Add to that the turkish and canadian and NZ problems, you’re seeing where it all adds up.

How often will I keep being wrong? Will I eventually get to a point where I can trade for higher stakes with losses trailing me back and forth?

Did you honestly not consider that as your profits grew that so would the losses? You thought that eventually the money generated each week would surpass the losses generated going back and forth over the same stretch. But when you started to increase the margin, you also increased the losses. When I first put in the hedge, I jumped from about $1700 margin to $2300.

The fear I have is that the extra margin has not been spread far enough yet to create the kind of harder losses that have eventuated – we haven’t swung 10%, there is not reason to expect the xtra margin would have materialized to this extent.

But what I see happening is that the longer you dwell in one area, the easier it is to build up little banks of resistance where position build up unresolved. This only happens when the markets become congested and don’t move, the moves are so small, you don’t have the big moves that end up clearing out many positions.

Could it be that it really is all just piling up between 1.14 and 1.10? It moves smaller, and so more positions are slotted in.

But it’s the shifts that are happening around other levels that count. Remember if your base currency is dropping, then those positions are costing you more and subsequently you lose more on them and they cost more in terms of margin. Also, the interest is also costing me more.

Auckland Video and Forex Intentions 2015

June 18th, 2015

Let’s get down to business with kurb promotions in 2015.

I started this article at the beginning of the year and I’m only getting around to finishing it now so I guess it’s a good time to get this one down the chute!

First, SEO: we’re still going to be making lots of money from cheap DVD duplication and dvd reproduction auckland!

Or not. I think we have reached the beginning of the end and for the next few years I will still do the CD DVD business but it’s time to begin the process of winding things down. It’s just too distracting trying to think about

Certain jobs I will be staying clear of. If the jobs run out, I will simply do nothing.

I was also still looking for paid interns in auckland to help with video editing and other media promotions admin tasks, in fact employment and utilizing people to carry out various tasks is at the centre of our focus.

But now I am more waiting for the forex trading to kick in so I can afford to tackle this properly.

Who can do what, and what needs to be done to meet our objectives?

Objectives where I can work less, and still get my creative projects completed with some support, and grow in new areas such as video, pirate stories and kids entertainment, and talent management.

But the biggest news is that I have renovated my garage to be part of my business empire, this is where I can move staff to be carrying out the kinds of work I don’t want to be involved in – the cd dvd duplication and copying that is at the centre of the business bringing in the work that brings in the money, but I’ve got more interesting things I’m interested in doing, so that can be happening out in the garage in our new space, managed away from me by someone who isn’t me.

So like I said, issues of who will be doing what is still at the fore, including how we will find the who’s to do the whats. At least where they will be doing it is sorted!

SO basically we’re back in 2015, the forex trading hasn’t been quite as robust as I’d hoped, and it may be some months before it has the strength to support bolder moves for kurb.

But I have actually been able to refine my technique, it’s now at the stage where I can’t refine unless I make a mistake, and if I make a mistake it could cost me dearly so any knowledge gained is paid for!

Staff was going to be the big one.

I am still focusing around staffing solutions to sort to go forward, but remember if you’ve got video editing staff, cd dvd duplication staff and everyone on board for printing and postering, managing these tasks, then you need jobs for them to do.

We can do well to think about staffing structures, who, where, doing what, and how theyre paid, then we give them jobs to do, mainly towards developing video services, pirate story gigs and brand, events, etc. attempting to plot out some moves.

I feel I’ve focused a little too much on getting the staff, but not really sure what they’ll do once we have a unit where we have 1-2 people who are doing video stuff with me as well as most kurb stuff being done.

I will have a series of foci. Pirates. Music. Videos. Talent. Events. I will use my staff skills to work on solutions to support efforts in these areas.

What happens once the buzzing clip is over and we are moving through these last few projects we’ve planned? The next point we are moving to is pirates – working on our pirate story videos for kids, as a way to get more gigs and improve the gig content and appeal.

The word is professional video services will build around pirates, then linking across to my personal projects doing music videos skits, etc, and hopefully pushing through to NYL. Pirate questions come up because I want to know how much work I will be doing to take it forward, and to where?

This is where I kept arriving. Do I really need staff to support me doing a pirate show and a couple of birthdays a month?

What other effort is matching this? I think it was pushing out in terms of talent, but as I am not taking the same approach in music and my own video creations we may have to reconsider what we will promote.

Videos for my forex channel are the priority in terms of creating the content I need.

Just to brainstrom some ideas

– Why I love forex trading
– Getting started with forex trading
– psychological aspects
– different trading techniques
– masters of forex hedging
– combining forex techniques

You get the idea, I could probably do 2-3 minutes a week on strategy thoughts on top of my reports and predictions.

This could be happening really soon because in terms of video projects I don’t really have much to be serious about, but then I sort of want to ease off being trading all day all night all week forever guy.

It’s not easy to make trading videos when your own trading isn’t going well.

What I am really driving at is trying to see what life will be like when the trading has unfolded in a year or two. What will business be like then? I am trying to shape my life into what that might be now, so I am picking one day a week for video, and maybe 3 conferences a week with my team as well as individual dialogues with people to keep the videos, events, websites, and web promotion all ticking along.

I think I’ve got to the point where I just want to cut to that, my 3 people in ukraine – we have this 3 people model, which I think works if they are a good team. We just are challenged with keeping the work flowing. It doesn’t look like there is much urgency on forex content to be honest but it’s the default because it has the most certain future and with my artist promotion it doesn’t feel like I have the content it is really important for me to build a process whereby I produce regular content.

But I’m also now looking at archiving again, which is simply an exercise in minimalism, and reducing the storage requirements – and increasing organisation – so your situation, all of it is easier to manage and if I’m trying to be more mobile this will really help mainly because I know there’s a lot of material I need to look at and decide we don’t need to keep this.

I don’t think I really am particularly worried about saving all the DVD’s. I might consider a heritage project, that is reducing it all to one collection but I wonder about the value of it. Who is this of value to? Well I just want to say, once I ran a CD/DVD business.

I was going to make a video talking about all the reasons I wanted to save the content, and what doing the business meant to me in terms of the concept of people telling their stories, so it’s forming part of a narrative too, it’s a narrative for me in representing my journey from what my business was to what it will be,

This is part of the archiving process, moving everything to a point where it’s resolved. In telling the story, I might decide, well hey, I put some stuff on a hard drive, and now we’re done. Biff the discs. Wipe the slate clean, end this process in the proper way.

***

I am starting to feel distinct doubts about the trading. My main doubt is that it will take twice as long as I thought, and the hedge fund idea is definitely 3 or more years away.

Especially since it is likely to take years to get me to the point of being ready for the hedge fund it is barely worth doing more than conceptualising at the moment. I think I know now I have to focus purely on learning the trading ropes and getting my bearings there in terms of demonstrable profit.

It doesn’t matter good my theories are if I can’t make a profit myself – it’s not just about funding it’s about being able to put your money where your mouth is.

I am still committed to the idea of practicing my presentation and video skills as it will be an addition to whatever I do.

In late breaking news there is now a rumour of possibly selling the kurb business which I’m assuming would be the cd/dvd, the printing, well it would be everything, but what would you consider keeping?

I’m just popping some quick ideas off the top of my head to think about on what will probably be something that needs a bit of thought. I am keen to sell because it will be a clean break for me, I get to close that part of my life / business with relatively little drama.

But I would prefer not to sell the lot.

The website and the brand. They can use the brand to do their business, but long term I want to own it so I can feel continuity as I head towards the hedge fund concept even though it may be a break of a few years. It still feels like it has mana to me, the brand concept.

So maybe I’m not selling the company at all. I’m selling the equipment to make the cd dvd duplication and maybe my contacts for printing.

I would want to paste up posters. That’s the only part I still want to do.

I would sell the brand but only for good cash. There’s no reason not to start completely fresh except that this website represents almost 8 years of sloppy bootstrapping of a media promotions company that was my launching pad, and I don’t know about selling it off and start again when I’m very much about developing evolving forms that retain telltale signs of it’s previous form and it’s origin.

Especially the hedge fund which is not really a intensive business brand, it’s about me showcasing my skills and services and retaining my story is part of the brand I present, and of course my business and my business brand is a huge part of that, even though it’s a completely different venture.

I mean what does kurb mean anyway?

From Promotions to Forex and FSU

June 5th, 2015

The plan for a transition in this business from a media focus to a finance focus and to different opportunities globally is beginning to slowly take shape.

Exciting ideas about travelling to do business in the former soviet union are starting to come to me.

What I wanted was to hire a staff who can execute online content and promotion campaigns, and work for very cheap wages.

The idea is to have 3 part timers to start off with broad skills but we want to have one person who has their strength managing video editing, another on the web design, and another on content promotion.

The aim is to provide an integrated content service at a competitive rate, but as I may have mentioned before, I will be my own biggest customer. I will not actively seek customers until I am ready to expand which only has the purpose of extending my own ability to conduct online content promotion campaigns.

Until I have the content and brand in place to work with, I will train my staff by getting them to produce content to promote the brand itself, which I guess will remain kurb promo. The music marketing brand could be opened up again, simply so we can start the staff off tackling blog topics related to how they could approach their own tasks, promoting the content.

We’re talking about looking at adwords, facebook ads, facebook content, talking to bloggers about content angles, posting on social media sites and sites such as reddit, forums, how to explore a niche and find and make contacts with people who will promote your material. We can also have them researching the russian side of things, a much bigger audience.

Getting them up and running shouldn’t be too hard as long as I can afford to have them working on this stuff – music marketing, video production, plus all the online promo for the forex side of things, revamping the website, my website, all websites. This should give us a clearer overview of what we’re trying to achieve.

The forex thing is really a default. That’s what makes the money, we want articles, links, videos, improvements to the website, improvements to ad campaigns, we want the full deal. I’ll be doing my weekly presentation. I’ll probably have a russian girl imitate me for the russian version.

So it’s the videos and the forex radio at the core and then the promotion campaign happening around it. There will be a seperate channel for forex, and a russian forex as well.

The russian forex, none of it would really need serious promotion in the next 2 years, I don’t see how I’m quickly going to sling together a serious platform for my hedge fund before then.

But these same strategies cover our artists site promotion as well, again probably a russian channel as well. It’s mainly there to provide business for the workers to pump money into the company.

After that we really have to search our soul in terms of the kinds of business we want to do. It’s easy to come back to NZ and start letting people know we have guys back in the ukraine who can do all this and that, we can make great music videos, websites, web campaigns etc. It’s easy to set up a site orientated towards westerners visiting ukraine.

Again we have this issue that just because we want to set up a kind of business opportunity it does not mean we should. If we enjoy the opportunity, pursue it as a social thing. set it up, and allow for it to run in such a away that it provides convenience for me, and my team can get paid also providing services and hospitality for western travellers.

But you can see the pattern. The business office run out of kiev provides the services for the artists, the content for forex, and the services for western travellers.

All these groups are put together in order to invest into forex, and come and party with me. I’ll charge them to skype with me, and I will just say look, your main problem is you need to trade for a year, come to ukraine and get yourself a babe and record your album and have my team take care of you.

It’s basically like a hostel for people drawn in through one of these avenues. Forex, music, but also pegs into my woofer thing.

So again and again it keeps coming back – the project focus is not on the business. It’s on the image. The image is to slowly draw people through the brand to investing in our hedge fund.

So there is no emphasis on business models, only content that enhances the brand. Which means focus is on the content and presentation. It’s on the videos and the website. So not much has changed there. Except we have no desire to make them successful. It’s just a website and some videos. They’re meant to sell the appearance but not the actual product.

Yes we do want to push the hedge fund as a product, but not necessarily aggressively, directly, it’s all a branding exercise. Everything seems to be being recast as a branding exercise, it’s designed to draw people in to the idea that they can have the life I do. What do you want? Money? Love? Fame? Community? My coaching service and sessions will provide.

It really makes me feel as if there’s nothing to do right now except build the brand. We won’t be ready to launch the hedge fund yet.

And that starts with producing forex related materials, but because we have such a long scope, and we don’t content support from ukraine, it seems difficult to begin putting this in place now, when it could all be so easy in a years time when we have funding and staff.

My role now is really on developing content concepts, practicing delivery, and thinking about the full presentation of our forex services.

Blogging, videos, then website set up, the more I think about it, the less I really am in a hurry. We’ve got 2 years.

The idea is that we can make enough money, more than enough trading our own cash. But if we can begin to bring in investors we will provide returns and good service and exclusivity will be at the forefront of our promotions. Part of it will be my personal brand, that I’m just too much of a dick to rip people off.

But ultimately it does not matter. It’s like in that american hustle movie, the more you say no, the more you create this image of not being desperate, the more people will want in.

We do keep discovering we’ve got more time, or so it seems. Nothing needs to be rushed and yet much as we approached video production, we see the need to start building up a nest in which to incubate the possibility for this hedge fund even if it only materializes years down the track, or not at all, simply remaining a branding exercise while the same trading methods we use every day will pay the bills, and it doesn’t much matter either way.

It begins to come back – when taking a business perspective because this is a business blog – to branding.

All my focus starts to fall on doing the work I enjoy and what I feel matters, it has nothing to do with profit, but what is the benefit from that? People feel positive about the image and brand being projected and this all flows back to the kurb brand which is no longer a media brand really unless someone else carries the torch, it is a financial services brand.

First I will start off with a series of blog type videos talking about tradiing. What attracts me to trading forex. Hedging. The simplicity of long term monetary trends, building strategies aroound events, I might start using this blog to map out the ideas you;d want to cover because you also want to talk about the psychology of it and various metaphysical aspects also, such as accepting what you’re really doing and the self mythologizing that can go on, the psychological traps. Styles of trading.

Then I will make the jump to starting my new channel and adding videos with me alone, and just get into that cycle of publishing a video perhaps once a week if I can make it, of course this is just practice and preparation for when I’m ready to take the next big step.

I can’t see that right now I would be keen to put the hedge fund or even the coaching in place. I need to see the result first. This is just practicing getting the content out so that I can have a website designer do the new page and presentation, I can have a video person prepare more professional presentations, and then get to building links, and coming up with a few gimmicks.

I really do wonder about the radio idea but we’ll see how it goes. Again and again it seems to come back to the brand bringing people in. I’ll be getting drum and bass people, ukraine people, youtube people.

Again what I am seeing here is no urgency to develop this. I may already be in ukraine when I really start to ramp it, I think the strategy must be to wait until next year to start making more plans, for now, focus on the intro videos and take it from there.

Duplicating Auckland Staff and Interns

May 17th, 2015

So the project focus is not on the business. It’s on the image.

It’s about brand as a platform to launch off.

It’s on the videos and the website. So not much has changed there. Except we have no desire to make them successfully viable. It’s just a website and some videos. They’re meant to sell the appearance but not the actual product.

Why? Because my business is no longer a profit driven entity it’s now my personal lifestyle vehicle.

This kind of vanity driven exercise is still business nonetheless, and it’s based on branding. What this actually shows is that it’s staff to push forward my branding and promotions agenda – that’s at the core of what we need to focus on. Staff to push forward . . . everything!

If it’s work related, kurb related, video related, we need staff in place. What are my tasks as it stands?

Well I still need to front my videos.

I still feel as if I’ll be doing some forex videos to kick off, just talking about my personal experiences leading to me getting into forex. Laying the ground work.

My plan is to get a girl who will do forex videos with us, and then as we get our content team running, get them to design the kurb forex site while I nut out all the terms.

But now . . . I’ve had a better idea. Forex Radio. I still want to do these videos maybe a few to get my channel rolling in that direction, then involve girls in both forex and pirate videos when that comes on the agenda.

The forex direction I’m going in has really made me think about the bigger picture for kurb, I still want to keep the business functioning but I can no longer really focus on it, until I have put more support in place.

We have done some real thinking recently. The realisation is that kurb will continue to become a branding front for business supported by my forex profits. The businesses and services run under kurb are the tentacles of my forex octopus.

I can’t focus on kurb primarily as a business any more, but it will fall under the tasks my staff will carry out so it’s over to their management. I can’t prioritise that.

How do we prepare the business for transition into that phase? Where are the weak points? Duplication of CD and DVD copies is easy it can be done by machine, it is the CD DVD printing that poses the biggest challenge, we need to have more printers set up ready to go.

I would still handle a lot of sales by email but I would need a new phone and a new phone contact for the business.

What keeps coming up as the magic ingredient is staff. We can’t afford to pay staff to make everything work and be better yet, but we have been challenged by this important solution so we need to take steps to improve.

We can start making progress. I took a step to post a job to hire a student for a role video editing, because I just got so frustrated with the lack of progress there I just need this bee video to be done.

But then I thought, I am a bit worried with a staff member how to ease them into doing everything, if we start with a video editor, is there going to be enough work for them?

This is often the problem that makes me become so tentative and cheap – not very compelling for prospective employees – being desperate to get things moving but not sure what exactly there is to do and move once the intial obstacles are cleared, I often need weeks to see where I am heading to next – big plans are problematic because perspectives can change quickly.

But video editing projects have we got?

Bee video – 2
Youre Mine / Dusky Sound / Second Chance – 2-3 weeks
Tour Videos – month
Pirate Videos

Then I realised. The forex videos. I can get them to execute a whole show, the whole thing. Once I have the routine of doing the forex report down, I can add an extra segment, and pay them $200 a week I reckon for 2 videos, plus we need our model which I guess I would pay $50, that’s still $250 a week we need to raise. But we also thought about out business. $400 a week to do everything, plus performance bonus. What we’re no saying is here is the ultimate expression of staff. Put $650 in a week, get out video and work goals.

The problem is, I would then have to make sure we were doing no less than $500 a week work or we would kind of be paying. But this is the point. Staff do work and video.

I’m left to do trading, music and all the other fun things.

So we’ve got two points here – where I am now, and where I am where I can pay people to cover my video and kurb.

But it still needs action. And my thought eventually was that most stuff can be done online if I have the perseverance to work at it and pay. So off I went back to odesk, which is upwork.

There are still problems in that the outsourcers can’t do everything, but for $500 you will get some super awesome shit. I’m not even spending that on this video but I know I am desperate to break the hold and make some progress. Procrastinating and being precious has got us into this mess.

The secret is to start activating staff, activating employees.

Activate people to do jobs then look to improve remembering we have plenty of money and limited results, we want to see results even if it’s a result that needs a lot more refinement.

Employing people has been a massive waste of time for me mainly because it seems I can’t offer a good opportunity with decent money, and I’m not a great boss in terms of making my expectations crystal clear. These two things make it hard for me, and like experiences elsewhere in my life, having tried and tried again, it’s now made me very wary about the whole situation. It’s hard for me to be positive and to make the step of not being so cheap when that’s my natural reaction to people being unreliable. Just be even more cheap and nickel and dime.

I am just speculating as to why staff is one of many areas in which I experience other people being really unreliable. I often wonder why people never do as they say they will.

My conclusion is that we’re living in a world with so many options and opportunities, but most people lack initiative they can’t really do much unless they’re being pressured to perform.

They are not used to the consequences of their decisions, so they are not very good at taking initiative and making decisions. They are good at being paid $20 an hour to do as theyre told and try not to get fired. Anything complex or challenging involving decisions is simply too difficult for them to confront.

This is why I have had so much trouble with clients, often I will take the initiative to provide a solution, which the client finds unsuitable, creating a wasted effort that must be repeated.

Most modern employees simply do not make decisions, which the client also finds unsuitable because there is no solution.

Basically another story of why I have been successful as an entrepreneur and I find it really hard to relate to employees who have a more of a jobsworth approach of just doing whatever theyre told to do without really thinking about what theyre doing or even how to do it.

As an entrepreneur, I only get paid when the client is happy. I can’t turn up at 2pm and leave at 4pm and get paid if I havent actually achieved anything. It’s amazing how many people just simply don’t know how to think.

My hope is that by investing more into the process with money and effort, I will be starting to find better people and

We still need Auckland intern staff and Ukraine staff.

Few of these staff will be actually full time. We just need to sketch out a framework so we can be certain we can afford these staff, because we know, staff can be activated to totally take over a lot of work and video duties, but our next task would appear to be plotting these developments against how our income develops to cover these costs.

We quickly realised here that it isn’t our plan to launch the forex service seriously for a few years, and their wages would be completely contingent on my ability to support them through trading.

$1000 is all I need to start making things happen seriously.

STAFF 2016 – 2017

//$300-$500
Video production + editing // $100
Agent, Promotion and management europe // $100
Website + social media // $100

//$650-1000
Kurb // $400
Auckland Video production
AUckland management, agent + events

//$800-$1500
Music production
Ukraine forex person – customer and brand manager for russian speaking clients fund
Auckland forex person – customer and brand manager for english speaking clients fund

***

So turning over an old stone, we go back to this ideas which was the first in a string of ideas that came thick and fast, but it is business focused so we take the opportunity to look into it.

Basically I don’t see the forex fund or the forex coaching advice taking off in the next couple of years. I can begin laying the groundwork, but no one will be interested in investing until my brand is powerful enough to tractor beam people in.

My plan is once I get my property goals sorted, I will start to coast on the $5k-$10k level. I wouldn’t need more than $500k and then of course theres the turkish. What is my adjusted rate for the turkish?

It’s about 30%. Add some profit, Let’s call it 40%. $100k in a turkish set up would render you an income of $800 a week. I guess this is more focused towards covering our expenses, but it’s a reminder how quickly things could happen for me once multiple income channels start opening up, and my only major expenses become mortgage repayments and staff, which id not major because those payments are offset by gains elsewhere in property value, and business profits.

This is how I am able to keep my trading in a bubble outside of one thing – having to produce equity for my housing plans.

I will then seek to establish a hedge fund of up to $10 million dollars. If you could continue your track record of 1% a week, 50% a year, $5 million dollars. That’s crazy.

I’d have the best staff. I don’t need a huge staff really, just the best.

My one hardcore NZ manager person who organises all the video, all the music, all the events, all marketing and promotion, all my travel etc. – she knows what I’m trying to do and she is doing it.

She’s telling me when I’m travelling, all my gigs, my regular video shoots, and she is tracking the post production of music and videos. She is in direct contact with the video people, studio people, and online marketing people, and whatevers left of kurb.

Auckland CD DVD Duplication PR and Branding

April 18th, 2015

Just because you can start a new business initiative, doesn’t mean you should.

I have had so so many ideas over the years for kurb and it seems like now I am just getting to the point of asking whether something is worth doing just because it’s a cool idea.

A lot of ideas are cool but they just never happen. The opportunity isn’t there. I often think about what I’d like to make happen. It’s a process of deduction.

We think of ideas that we have the opportunity to make happen, and those improvements we can make that would have the biggest effect in improving our situation.

That’s why the idea of doing auckland video production of children’s pirate stories and forex advice came from. Focusing on key areas where I want to advance my skills and opportunities in a specific project.

These were projects where I saw the opportunity aligning that I could use video to create a platform for something not only that I was good at, but had the opportunities to be viable and to also progress and scale into something that would continue to grow. That is even if the business idea failed to take off or that opportunity wasn’t timed correctly, there would be the aspect of video production where we were also gaining good skills and advancing that also as a viable business opportunity.

It’s all about leveraging what you have into something that creates more value. We could even do auckland dvd duplication or a cd duplication with that content and put it on to DVD’s and make that an additional value item.

But then I was really struck while I was writing here by the relationship between trading and the rest of my business, and although I had my browser crash and lost some writing on the subject that breakthrough idea has stuck.

It came from the thought that not only will it take more effort to make the same money from cd/dvd, pirates, forex investment advice and funds, and video production, but in the months that it would take to breathe life into these businesses – even the pirates which is already viable – I could easily outstrip the earnings with forex profits.

In a new way of seeing the situation, I can suddenly see it as economically sub optimum. By the time we made any effort to businessify these initiatives, which would be slow anyway because of trading, within months my trading is gushing out cash and charging $400 for a pirate show or $50 for a forex consultation is ridiculous because I’ve moved too swiftly beyond that paradigm.

So at this point we have to identify that these are not being pushed towards profit driven outcomes.

In the past we had already recognised that kurb could become a front – perhaps even a PR front – because my earnings in trading allow these other aspects of the business – cd/dvd duplication, posters, pirate stories, forex investment and advice as a service, and video production – to function despite the fact that they are not viable businesses.

They are vanity projects.They are not businesses. I already said that it was more branding than anything else but rather than being part branding part business, now I accept, it is merely branding that is able to deliver a service but exist mainly as branding because trading has a boring vibe – not only projecting the reality of the image of what I do as a trader, but also the actual trading which aside from making lots of money, is pretty boring and unglamourous watching numbers go up and down.

As a business it’s not real. That doesn’t mean it has no purpose or value, not at all. It just means seeing it as operations and not as branding and PR is flawed because you waste focus and energy trying to make it viable when that is not required.

I could spend months trying to lift my pirate thing or the forex up to a more viable level. It might be profitable and grow long term. But at the same time my earnings from trading could balloon out making any effort here a waste of time because there’s only so much ballooning I can do before it becomes pointless to operate as a business. I am not somehow who desires limitless wealth.

My desire in these business areas is about making a project happen and being excited about providing services and the work and skills that go into that.

Which is totally acceptable. It’s just you can have the wrong focus if you see it as a profit exercise. The whole project becomes easier to manage once you see that profitability isn’t the required outcome.

Following this thought, I am thinking seriously about dialling back the cd dvd duplication business simply because currency trading is taking up so much of my focus, I’m finding maintaing the dvd cd copying just so stressful, maintaining the equipment, dealing with the clients. I do want to keep it going, but not in any circumstances where it’s causing me stress because I really take my commitment to making sure work is done for my clients very seriously and it causes me a lot of stress when I’m so focused on my trading and I’m also selling property and dealing with some legal issues.

What I like about this cd duplication work is that you can go to work problem solving and when you figure out the solution, you can go into production and make a lot of progress – when I’m rerunning a job of 500 DVD’s for a regular client, I’m making $400+ in a few hours that’s good living. I enjoy the productivity and the feeling of accomplishment, getting the job done and getting paid for good work.

But the business needs more attention. It needs money spent on equipment.

And I can’t make that commitment while I’m focused on trading, and soon, the return on my investment into trading will start to outpace my business and then it becomes a waste of time to spend my time working on duplication or printing jobs rather than trading.

When my trading profit grows so that I can pull back my intensity, then I can look at where I am at with the business. It is not sensible to shut the door in any case, but I do feel I owe the last incarnation of my business a grace period whereby it is not strangled to death, put is put out to pasture so to speak. I may not do too many DVD’s in a few years but while I’m in the country I’ll still front up even if the level of service doesn’t keep up.

My issue was the concern I will miss that income.

But now I see the income is not the issue, it is very liberating.

***

I am now beginning to take a look at the full picture of our forex trading and what it could look like.

Basically right now, my equity is shaking out so I am able to put more money back on the table. I can also see that there are parts of the range od EURUSD, EURGBP, AUDUSD and AUDGBP that we are just never going to go back to for at least a year and it may aswell not even be part of anything, that part of the range will simply site their as $20k loss I can’t get back for a year or two, but as our game moves on, it will slowly be dwarfed, or, due to our hedging, simply out weighted.

The technique is working so well. But the hard part is picking bottoms!

When I’m doing well, new ideas are jumping up in my head. My theory is that when you’re on trend you can ride down and milk it all the way – until it bottoms. When do you pick the bottom?

To me, pulling out too early is the mistake that just has to be made, and if the sucker rolls through your hedge and out the other side, then you have to take the pain. We are still in the stages of being able to lather enough equity up to take that pain, so it can then withdraw, and our equity rise. The first time we hedged up, it was because we had to. The euro blew through 1.10 and we were having to prepare for parity. The only thing we could do was hedge.

As our equity builds, we become more able to withstand a deep roll through on a trimmed back hedge so letting the hedge ease out so that you can reclaim your equity when the trend bottoms is only something you can do once you become more established and is more of a macro strategic technique for winning back your equity.

Until then you are forced to use the hedge to survive.

Integrating Multiple Forex Trading Strategies

April 8th, 2015

Now that I have several main branches of my trading strategy I am looking for an overview which sees balancing these aspects for the best overall result.

We have our day to day hedging system, which we always saw as the main source of our trading income, but we also have new strategies we’re using.

It was our goal to attempt to bring this income up to $1500-$2500 a week. Not only does that allow me to afford a decent budget for all our projects, but it would also bring pace to our capital growth that allows for expansion of exposure, this is the tipping point I am searching out for because the capital growth allows you to increase risk, but instead of increasing profit you simply experiment with being less active, a big goal for me is to basically not trade on monday and tuesday day.

It is even more significant now that we have learnt to hedge properly, meaning as our equity rises, it never falls, allowing us to put more on the table. Every $100 we earn is $100 capital, and $100 capital can be leveraged for $50k. Now is not the time for taking such risks, but as the equity grows, it becomes acceptable.

However the new ranges we run in are smaller than the full range, new investment is not spread so far and will only be in a quarter of the range. We do not have to double down. Another $500 down would double our profits. $200 must surely see our profits increase by that much a week. that means adding a good $10k to each of our main pairs.

Adding $600 is $300k, that’s $50k to each pair, $25k on each side. Think about what that would add to AUDEUR on $80k or AUDGBP on $60k. That would just change it all there. Remember we don’t really want to buy more euros, nor against USD, but it seems until we get to $2500 total margin, we must be a bit reckless. We’re not going to progress until we buy more 4 figure amounts, and soon enough, they will left behind and they will cost. We can’t stop them costing. We just have to right the hedge knowing we’ll be making more profit somewhere.

The thing is we could lay down more capital, but that crazy week when we next make grands, will be creeping forward and that will be a large event. 4% of my USD hedge would be about $8k so to see that ride down again on a greek crisis like it did last time would be so wild. The potential to make thousands of dollars grows.

But our daily hedging is now only one tactic we’re using. It’s the main focus, but seeing what else we can do gives us the opportunity to regulate what we’re doing.

Now the carry trade system is where you generate money from interest differentials. I borrow $100k worth of euros at .05% interest and buy turkish lira for 8% interest. The thing is, you’ve leveraged $250 to borrow $100k and 8% interest on $100k is $160 a week.

The turkish currency can loose 2000+ pips that’s like 15%, $15k on a $100k position. 3 of those, you need $50k at least with another $25k on standby should things get nasty.

One of the amazing things about the carry trade system is that you’ve got $50k protecting 3 investments of $100k and youre having $500 generated by your account each week. 1% return a week. 50% return a year. Insane styles. We’re not even talking about the profit. My $1k position moves up during the day, I take $2.

On some days, a number of my positions could pull up some 200 pips and across 5 x 10k positions (I would go for 20-30 x $10k positions at a time) that’s $150. That could happen each week. On a sudden data read, that could be $1500. We would take that for a kick, and suddenly I’m making $4k in a month off the account and the money is stacking.

As soon as I can get $10k into that account I can be making a good $200 from it. We could do that. But we can’t go full blown until we sell more assets.

Why stop there why not load $200k in and have 8 positions making me $1500 a week.

Then finally we have our new event risk hedges. We won’t make money every time but we can probably learn to make $200, $500 or more.

***

So what is the narrative we are facing?

We are no longer on the edge. We have no losses under $1000 which means we are further in the middle than we’ve been all year, this is where we want to be, but for one thing.

Our hedges on the USD and GBP against the euro are too blown out. Euro rises are not what we want.

But no matter how much the Euro rises and I can’t see it going more than a few cents, it will be beaten back, and the USD will rise again. Knowing that the growth of the Euro hedge will be limited and a dangerous greek situation favourable, we simply wait on the USD to gain strength again distributing hedging efforts amongst the NZD and CAD so when the euro drops, we don’t carry more losses that keep the hedging cycle spinning. I am not afraid to increase hedges, my original goal was to hold $10k equity and now we’re back on $12.5k and my goal for expanding is $13k but I would like to see the equity build as much as possible before we go in again.

The GBP is also another one that will turn on the Euro and take it’s losses back, and shows how the USDEUR will play. Again it may be building on the NZDGBP or even AUDGBP which is a good carry that we use to hedge against further expensive losses to the GBP. the point of all this is when the euro drops eventually, the equity flows back, we sell off the big hedge and we head towards the parity that is being established elsewhere and allows us to work with large figures, larger profits, tiny losses in equity due to large, perfectly balance hedges that have tiny biases designed to whittle away the loss and build equity.

I am feeling really much more knowledgeable about forex again, and that feeling that it’s just a matter of time has me again.

The fact that we are not on the edge is a huge advantage based on our most basic models of the system from last year. When we’re in the middle, both sides make profit with every move. It’s only when one side is topping, we have to become so much more careful and conservative – with every push higher, the huge debt on the other side grows in one huge momentous movement, whereas you must follow the trend when you know youre reaching ever closer to the risk of leaving a highmark that will be carried as a loss for years.

Though we learned to ride the trend, we are lucky the USD has given us a trend – we must also remember the movement of the last few months is not normal. The EUR and the AUD are not going back for a long time. Seeing the EURAUD and the EURGBP coming back to levels shows the days of wildness are over we are not in danger as long as the hedge is maintained. They won’t go to the edge unless the euro tumbles again and we will be ready.

The way I see it, losses won’t have many places left to hide, Unless they are happening on the edge, need somewhere where they can replace smaller numbers, and then stretch out and cost money. It’s happened a bit with the AUDUSD but they can’t make it hard. The positions aren’t far stretched they don’t add up. It’s a cheap pair anyway, all the AUD ones are, it doesn’t balloon like the GBP.

But my point is it will be staying within a broader range. I’m looking at charts here and seeing years where . . . AUDUSD hasn’t moved 3c. Since I’ve been trading it’s moved 14c. The EURGBP didn’t move more than 2c is the last 6 months of last year, it’s moved almost 8c in the last 3 months. The GBPAUD the smallest ranged pair, had years where it never moved more than 3.5c, whereas it’s moved 5c since I started trading and it’s by far the smallest range, and we don’t even need to talk about the EURUSD going from 1.29 to 1.05 a full 20% move in a few months. It is an active pair, but still it went for 2 years and only moved 13c in comparison.

This is territory I covered again to back up my argument, don’t be surprised if we have set ranges now

USDAUD – 75-80
USDGBP – 147-152
USDEUR -105-114

The AUD and EURGBP will be even tighter once they find their spot and there’s every reason to barrel in there, the AUD may still drop a little but where it is now is still part of where it might visit.

It is possible that we won’t overcome that GBPEUR hedge for some time but we will. So keep buying and allow the EUR to unwind.

When the price action settles into a smaller range, it’s less volatile so you can buy much bigger positions knowing that huge losses won’t be an issue and the profits will come around eventually.

***

non trending low capital high loss (EURUSD): buy moderately (load higher) upside / buy small (buy less) downside (dont load too much so equity can drain before reversal)

non trending high capital low loss (GBPEUR/AUDEUR): sell upside / buy small (buy less) downside (beached as, draining equity out of rises as the other side falls slower)

non trending high capital high loss (GBPUSD): sell upside / buy small (buy less) downside (bail out end of the line, lowest buys, equity draining as loss mounts)

trending high capital high loss (AUDGBP/AUDUSD): buy moderately (load lower) upside / buy moderately (buy more) downside (the comeback, load to match the strength of the trend, lower risk on bigger buys)

trending high capital low loss (USDEUR): buy moderately (load lower) upside / buy small (buy less) downside (runaway hedge loaded gun – be careful dont load up too much)

trending low capital high loss (EURGBP/EURAUD): buy big (load higher) upside / buy moderately (buy more) downside (the profiter, snatching profits to match losses)

trending low capital low loss (USDGBP): buy moderately (load lower) upside / buy moderately (buy more) downside (working winding down the hedge and watching for reversal)

non trending low capital low loss (USDAUD/GBPAUD): buy small (buy more) upside / buy small (buy less) downside (reverse in play – equity rising as reversal plays out)

NFP and Forex Event Risk Hedging

April 5th, 2015

Having just come off the non farm payrolls or nfp reports which are a major “event risk” I am getting more insights and it appears although I am out of the dangerzone and yet my profits are not improving greatly, I am starting to get a few new ideas.

As usual with an NFP which is the job figures for the US, or a US fed rate decision, the market always reacts very strongly and you get some massive movements that make you quake a little.

Especially when you see the number and it’s way out as it has been the last 2 times, and you know things are about to get crazy. Last time it was way over expectations, this time way under, so the USD started rocketing down.

This would have been good news, except I massively shorted the EURUSD to protect myself against any sudden moves downward by the euro.

But I realised the Euro hedge I have which about $40k out of balance is actually also hedged against the $31k I have against the USD in CAD and NZD.

I had hedges on the USDAUD as well as the USDGBP but they were smaller and biased against the USD, so when the USD started dropping, my equity rose by about $1000, making it a good day.

But what it means in terms of the bigger picture of hedgind, it means if I am concerned about the USD falling, I can buy high interest NZD against it – it doesn’t even have to make money! It just makes nice interest, and protects me should the USD keep falling, as it will be made up for by a spread across 5 currencies which means it doesn’t have to be all hedged into the euro, and when the euro falls again, there will be the chance to regain the equity.

The USD falling of course does present the opportunity to get in even deeper, but the rumblings have begun, if it moves beyond $1.10, it may be off to spend some time in that range, in which case we certainly will be building up the hedge. When these things unfold, we buy NZD as well as EUR, to keep the huge USD hedge from gobbling my equity, because I’ll be taking profit on the NZD side knowing when the USD rises again, the euro will fall, but because I havent invested deeply, I will get equity back on the USD side. the NZD side will fall but there’s not nearly as much falling there even though it’s hedged. So what you end up with is stuck with NZD rather the EUR. Both are picked to fall, but the NZD pays great interest, and doesn’t have a sovereign risk that could see it quickly bottom.

There is more chance of getting my money back suffering less with the NZD, and what’s more, if I’m worried about makingmy money back when the euro finally falls, than lean in to the NZD euro also, that way you’re hedged again, also, again, on a great interest rate, on a currency set to benefit greatly if there’s a serious problem with the euro.

We are steering away from the euro knowing if there’s a problem we already have USDEUR, and we chose to go with NZDUSD and NZDEUR rather than buy more EURUSD in an attempt to hedge the big long USD position we already put out.

I started playing with the options and saw that you could set and change the default stop loss or take profit. One of the main reasons I dont use these is because it wastes too much time when im trading quickly setting these. Now I can do it by default, my thinking was in how often I am finding meagre profits when I awake, wondering if the market didnt roll up and down and end up right where it started, not unlikely. If i had take profits, it could have bounced up and down, taken all the profit, and I would have done very little.

It frustrated me to think if the market jumped suddenly, my profit would trigger and yet my losses would continue but the market jumps unexpectedly far less than times I am not watching the screen and I am perhaps losing profit, especially during the day when things are so slow, I may easily go an hour or two without checking. Often these are little ripples, often it seems, the profit is just easing away the moment I notice it jumped up, these are the little day moments I want to grab. Especially trading tight during the short but slow and choppy day movements, and looser at night so I get better profits when I sleep, but also, it means a nice spread of short and longer profit takes should there be a jump – knowing, that by it’s nature, every jump in fx eventually has its retrace and the retrace is the main thing I’m fighting.

Too often, I miss the chance to take good profit before the retrace kicks in and I find myself selling at exactly the wrong time, at the top of the retrace before the continuation begins extending again.

But it was only when the NFP kicked in that I realised it wasnt just about when I wasnt watching and couldnt trade.

Because on an NFP or US fed decision, I can barely trade in the first half an hour, the system gets so clogged – by people who are all trading on auto, naturally – Usually for the first 5 minutes I can only watch the carnage, at which point I may be able to start forcing a trade in maybe one every minute or two, while scrambling to take a few choice juicy profits while the numbers jump from side to side.

When the profit takes are already there, I don’t need to close positions, they will close themselves, I can focus on buying knowing that no losses will close when it does its crazy swing in the first few minutes, but all profits will be taken.

My profit jumped $15 in the first minute of the NFP as all my little regular positions Id built up in the last few hours trading with the take profit on all closed out with profits, something I never could have done with the system clogged and the price jumping up and down regularly.

Whats the point in having a skyrocketing position if you cant grab it before it starts falling again, while youre trying to throw down new positions based on the data read?

Better to grab the profit and if the price keeps falling, as long as you have a strong hedge, the momentum will fade and once the dust settles you can begin to clean up your hedging configuration.

Which inspires different trade set ups based on your hedging position.

Then I started to think, what if I had followed the implicit suggestion at daily fx of going long AUDUSD and short GBPUSD knowing those combos would make immediate leaps to the other side of it’s range if the data favoured, but struggle to move quite so much in the other direction if the data was unfavourable.

In this case it hammered the USD and the AUD went flying up, even hammering on the GBP.

It seems that I am learnig the deeper level of hedging and that is indirect hedging, seeing what they talk about on daily fx, that even though the USD was the currency hit, it still opened the door to the AUD rising against the GBP, and I believe the EUR was up on the AUD, and also gave the GBP a good smack, because the drop in the USD pulled the price pressure of these two which have been getting a kicking from the USD much longer than the GBP has.

I am starting to understand.

It has only just occured to me. Hedging with a stop loss around a big event risk is guaranteed money, unless it’s a fizzer, but we know the big movers like nfp can shift a market 1-2% in 10 or 20 minutes, and 1 or 2 events of that magnitude happen most weeks.

USD, AUD, GBP all have jobs figures, GDP figures and interest rate announcements every month. The trouble with the euro is that it’s made up of different economies and though the german is the biggest, it can’t really move the market 1% in a short period so that we can be reasonably sure that we can exit the game with a good result.

Next week there is AUD and GBP rate decisions and also a Canadian jobs figure. CAD is not a currency I hedge, but it does raise the idea of testing out fundamental trading on event risks – it is essentially gambling, but with very good odds on the pay out. It could go either way, but losses can be limited, and profits maximized, so we have to be in, even if it is only $5k with a $5 stop and taking $20.

What would stop you hedging specifically for the event? Nothing. It makes perfect sense.

Part of the delight of hedging is that on top of my usual day to day trading, I can also set off spot trades on event risks, that means even if I lose $10-20 on one side (while making $50-200 on the other) that loss would be covered by the movements in my normal trades anyway.

Even if we get a massive jump, our hedges will be further protected by the fact this will provide some extra doses of capital.

This as well as doing carry based trades. There is lots of fun to be had using money to make more money!

So you set two lots against each other – this alone requires $500 to be leveraged and therefore removed from your equity – with a .5% profit and say, a .1% loss, one of them hits the stop, you lose $100, bang, then rolls on to take your profit of $500 – you have profited $400 provided it doesn’t knock one stop out, then swing back and knock the other . . .

So what are the risks, there is “slippage” where low liquidity means you simply cant get out of your position automatically fast enough, and rather than a $10 loss it may turn up a $12, $15 loss because the robots just arent fast enouh when theyre getting slammed from a data read.

But what I see is the risk of volatility triggering the wrong stops. Last night, the swings were huge due to the lack of liquidity, it momentarily swung down as far as it ended up swinging up. To have both your stops knocked out would be really bad.

The advice given here is to make the profits stops rather than the losses. The problem is if you get a huge move, it takes the profit and then just keeps rolling. The other suggestion is to make the stops nice and big so that initial volatility won’t knock the stops until the trend emerges.

The other risk other than the stops being too tight is the profit being too loose, so you get the profit shooting up, the stop on the other side is triggered, but it stops short of the profit, and then flies down again – you’d probably still end up with a profit here.

What about a second hedge, where the profits are as big as the losses on the first hedge. that is the second hedge cancels out the loss on the first hedge, leaving you with just the profit.

In an emergency where it knocks out every stop, you’d end up only taking one loss on one side. But if the stops were big on the first hedge, this could be a favourable set up, because you make a profit on a small move as well as a big move.

The only way you lose is if it somehow knocks both small stops in volatility, then knocks a big stop, before falling back before you get your profit. That would be pretty hard luck and low probability.

Perhaps you need a range of hedges.

We could chose a range 3 pairs around a currency facing an active risk, and but $15 each side of each. $90k. Each $15k is 3 lots of $5k.

one has a .2% stop / .4% take; the next a .4% stop but a 1% take, and the last has no stop or take. Or it has no take on the danger side, and and no stop on the safe side.

That means if it jumps around and then takes off, we take 1% but only lose .8%, while if shoots off, we take 1.4% but only lose .6% if it jumps around and stays still, yes, we lose up to .6% – only $30 on $5k – but in any case we still have the last set with no stop or take, floating about, and we have to decide when the best time to cut that is. usually after 5-15 minutes the clear trend is deduced and you must tap out of the position hoping that the other side will run significantly. In fact you are then just back to your classic game, buying the rise, riding the hedge as far as it goes.

But then once you add the consideration of trends and hedges you get another aspect.

You can see why this type of hedging isn’t so straightforward. You have to be very strategic and thats where it works in step with the established hedges and having contingencies.

With the USD we’d want the stops down and the profits open, whereas in profits on the EUR side we know would be limited. We also know that if it does reach 1.5% that is a massive swing and the massive profit could be taken knowing that the profit was nice, we can re hedge, and the spike would surely be mature and extended at that point.

So profit open on the USD side, loss open on EUR?

So last night my usd stops would be triggered at .1%, and then the EUR would have shot off and triggered at 1%. success! I probably would have biased towards the euro because it was hedged against so it would have been nice. But what if it was the opposite? The US stops may still have been triggered in the initial volatility and then the USD would have soared, but id have nothing on that side, so I would have eaten a huge loss. The idea would have been to put the USD stops out further in this set up becuase remember the USD can come back.

Also once the fail pattern had been established, you’d only have to buy big – real big – on the winning side to match the hedge up favourably, and possibly eject the otherside but this is ninja stuff that can’t be counted on, and I wouldn’t really want to play with until I was more familiar.

It appears that there really is no foolproof way of ensuring a profit.

I believe the 3 hedge system with consideration of trends and hedges already in place is the ticket. The only way you lose in this system is if it swings mildly, knocks both your early stops out, and never reaches the profit margins further out.

What we really have to do is begin experimenting with hedges and stops on event risks and see what the results are. We will learn soon enough if wild swings do knock out our stops.

We want to increase our capital investment so trying a few small multi layered hedges with very deep stops is a fine way to experiment as we are ready to let our hedges build up in a natural way, trying things out and being able to handle a few failures.

Forex Gateways and Lucky Dips

April 4th, 2015

So the forex currency trading I have been working on seems to still be on a plateau.

So what is the problem? Well what were you expecting? Being more confident, and being well past the stage of placing tiny positions to ecperiment – and nicely riding up the USD for gains, I thought we’d see the jump forward from where we’ve seen more $2-300 days and less $100 days, we’d see a new water mark for equity passed so we could put in more into the margin and more money on the table would result in more gains coming off.

But now my carry fees are crossing $32 a day. There is some growth but it’s not the breakthrough. I think we have to remember that much of the big gains come on the days when something big goes down. My next $500 day can’t be too far away.

I’m actually $212 with a few busy hours left to go for today, so on a thursday I am looking as busy as I tend to get later in the week.

But you see I started to analyse in the last post some of the reasons why the profits seem to barely outweigh the losses, and for all the profits I’ve made I still have big unresolved losses floating in my account.

This started to prompt my thinking on why it’s been weeks since I left the danger zone, where I was trading incredibly cautiously but profitably, and yet the profit is not picking up significantly.

I have more money on the table than ever and yet my profit is fairly similar to what it was.

We know that there can come the day when you’re making good money, but I don’t particularly want to be working away for it all day and night. What is the explanation for what”s happening and more importantly how do we pull out of it?

Our most basic model was that we simply doubled down. If we doubled everything we were doing, we’d make twice as much money. But I can’t afford to double the losses I’m carrying now. But it wouldn’t be the losses you were doubling.

Whereas in the past 6 months there has been an unprecedented move to one side which has cost us, now we’re seeing much less volatile one sided movement, so as it crosses and retraces old ground, we are still making money both sides without pulling into an unfamiliar range and stretching out any losses.

What we’ve got now, is new gateways. When I started trading the euro, it was 1.28. Now it’s 1.08 and it will just bounce from 1.05 – 1.10 a lot, it may have trouble leaving that range for a long time every time it goes in so we have now got a bit more faith that we can weigh in because the market is a lot less volatile and tight within a range.

If the USD falls, it will rise again. The EUR has no strength to push up. AUD and GBP will loll about in the middle, the AUD will tend to drop but the GBP could just rise if normalization comes over the horizon.

AUDGBP is in a tight range long term. No problems, and EURGBP also seems to be coming back into a new range.

The USDGBP is the only real challenge. In any case I don’t think the USD can run too much farther into new territory. We don’t need a full hedge, while the fightback from the Euro can only go so far just one bit of bad news and the GBP will be back on the front foot.

We have AUDEUR starting to reach a perfect hedge balance. The same losses on both sides, the same amount of capital on both sides. This must represent certain things, but I haven’t thought it through completely yet.

But when they are balanced not only can you really increase your exposure knowing you’re in control, but you have a system where you keep both sides balanced, but you slowly bring that to profit on both sides. You take profit on one side and also buy back losses on the other depending on where you’re at, it’s about perfect balance,

The goal in this case is to keep the account value the same, but when one side goes up, you buy, you never sell, you only balance.

Of course you must sell at some point. But I would see a number of tactics that are all very zen, aiming to maintian the balance.

You only sell when you can see a real dip kicking in. You might sell one or two positions, let the dip ride, then buy, which may give you a sell on the other side. Once the balance is perfect, you can keep it slightly imperfect to allow the profit to accumulate more quickly than the loss, youre always buying on the side going up, much like the rides we get on now. It is when the rally stalls that you seek to balance.

so when you get 3 greens youre buying, until you get 3 reds, then youre selling, then moving to buying on the other side to match the extra positions you failed to sell.

SO in order to balance on the side that is too high you sell more when it’s going up and buy less when it’s going down, and on the lower side, you buy more when it’s going up, and buy more when it’s going down. You just buy more until you get to the level.

This leaves it open to working with the trend also, buying more with the trend side.

But what about loss vs capital in terms of high and low sides? this is getting super complex.

Loading relates to the two numbers equalling out – if you want to make them even. This models shows EUR and USD, do we want them to be even down here or do we want to keep EUR low because the trend is letting it go lower.

non trending low capital high loss (EURUSD): buy moderately (load higher) upside / buy small (buy less) downside (dont load too much so equity can drain before reversal)

non trending high capital low loss (GBPEUR/AUDEUR): sell upside / buy small (buy less) downside (beached as, draining equity out of rises as the other side falls slower)

non trending high capital high loss (GBPUSD): sell upside / buy small (buy less) downside (bail out end of the line, lowest buys, equity draining as loss mounts)

trending high capital high loss (AUDGBP/AUDUSD): buy moderately (load lower) upside / buy moderately (buy more) downside (the comeback, load to match the strength of the trend, lower risk on bigger buys)

trending high capital low loss (USDEUR): buy moderately (load lower) upside / buy small (buy less) downside (runaway hedge loaded gun – be careful dont load up too much)

trending low capital high loss (EURGBP/EURAUD): buy big (load higher) upside / buy moderately (buy more) downside (the profiter, snatching profits to match losses)

trending low capital low loss (USDGBP): buy moderately (load lower) upside / buy moderately (buy more) downside (working winding down the hedge and watching for reversal)

non trending low capital low loss (USDAUD/GBPAUD): buy small (buy more) upside / buy small (buy less) downside (reverse in play – equity rising as reversal plays out)

Of course this needs to be tuned. How strong is the trend? How disparate are the investment capital and the losses?

What if we just made all the hedges even immediately, what would that mean? You could possibly try the technique that when you take profit, you replace it with more, and add the difference to the other side, maybe relative to the margin taken on the profit. A 50c profit is taken, allowing a margin for $250.

So what is the solution arising here?

I guess it’s when we look at the weak spots and what could go wrong, it’s that the euro has a vast wasteland of $1.10 – $1.16 and if we end up back there with our hedges, it will not be pretty. What I am hoping for would be that we’d make up the difference on gains by the AUD and GBP vs the USD, middling those spreads nicely, but once again we would be holding out for another move from the USD against the EUR based on long term monetary policy. We know there is only so far the EUR can go, above $1.14 would really surprise me, and so we can build a counter hedge which might then again need to be countered, to the point that we are waiting to be able to afford to be able to ease off the massive hedges.

It suggests though that profit could be good, even if the losses have to restore before we see the equity emerge.

And we’re hoping AUD stays 75-79 as that area that is 79-82 becomes a wasteland we would have to repopulate, but the other AUD pairs are already fairly light and just waiting to come back when the AUD gets a boost. EURAUD already has a fine modest spread which explains why it doesn’t give me much trouble. GBPAUD still has the smallest spread of all but the question is where to put it? I know that the GBP is likely to dominate the AUD. The GBP can forge on, but the AUD can recover, so just put money down! When the GBPAUD balloons out, the thudding great counter hedges will come out on the other side. The ceiling for that exists.

The fact is the GBPAUD is the only pair still behaving as it did last year. There’s no reason to believe there will be wild swings, we should be pushing greater investment.

GBP we must wait for the signal to see what it’s doing, while EUR we know has only limited potential so both we should continue to be cautious, I would buy the GBP vs the euro but I am already overbrought and experiencing the dangers of vigorous hedging. I can most likely take the drops, But one day soo the GBP is coming back, we’ll make some money riding it up again, but just as with the AUD recently, we need to be fast to get out.

Or again we end up with hedge on counter hedge and it gets precarious. At least with EURGBP you have a pair that usually doesnt move a lot. Slowly it will settle into it’s new range but we need the GBP to go higher and release it’s hedge first. If not, the counter hedge build must happen here also if the movement can’t be contained. There is a barren area but it seems well into the larger range and I don’t think we’ll be reaching that far for some time.

With GBPUSD we don’t see to have a wasteland as such, again, very moderated, it’s just that danger with buying the GBP pairs they can really balloon on the price of buying pounds.

So what you have is as I say gateways – the EUR can’t rise below a certain level and the USD will come back no matter where it heads down to, making it certainly a lucky dip – that is, the dips are sure to be lucky, for whenever the EUR rises, we can buy against it because it will fall, and whenever the USD falls, we can buy it, because it will rise.