This week we saw the most anticipated economic report out of the U.S.; non-farm payrolls. Non-farm payrolls are released every first Friday of the each month for the previous month. Financial markets were very nervous about this report as the Fed is looking to reduce stimulus which was the only driver of the global equity market rally. Forex traders were also anxious to get the official figure after the ADP report, once again, hinted at weakness in the U.S. labor market.
The fear was that a number above 200,000, which would be good for the general public, would have sparked a large sell-off as it would get the Fed one step closer to reduce or adjust stimulus provided. The new bad word on the street is ‘tapering’. At this point we are back to 2008 where good economic news are considered bad, and bad economic news are considered good. We know what happened after a pro-longed period of this approach.
The U.S. created 175,000 jobs in May and the unemployment rate rose to 7.6%. Many took this report as being in the sweet spot for the Fed not to taper its $85 Billion a month stimulus and the economy to continue to grind out minor economic gains. The 12-month average is 172,000 jobs which barely keep up with the estimated 150,000 new employees created per month. Revisions for March as well as April showed that the economy added 12,000 less jobs than previously reported. In general we already see a reversal in the labor trend which will become even more evident over the next three labor reports and eventually paint a dark economic picture for the U.S. economy.
Overview of profits for the week which ended June 7th
- USDJPY: 110 pips
- AUDJPY: 450 pips
- EURAUD: 392 pips
- GBPUSD: 303 pips
- USDCAD: 103 pips
- USDCHF: 102 pips
Total: 1,460 pips
Exiting a trade at a loss in order to reduce floating trading losses
- GBPCHF: - 655 pips
Total Profits: 805 pips
Strategy Update
We have implemented a new approach starting in June in order to further cut our floating trading losses and older positions which have been in our portfolio. During weeks like this week where our profits eclipsed over 1,000 pips for the week we will start exiting floating trading losses which will not only cut our overall floating trading losses, but also free up capital and streamline our portfolio while we still deliver monthly profits above 1,200 pips. Over the next few months we expect to drastically reduce our floating trading losses which will boost portfolio efficiency.
Monday, June 3rd
USDJPY Long Recommendation
We recommended a long position at 100.20 with a take profit level of 102.70 (USDJPY Support Zone). This pair also triggered our stop sell order at 99.70 as well as our second entry level at 99.00. We closed this trade on June 5th for a profit of 110 pips as our adjusted take profit level of 99.70 was triggered for the long positions as well as our take profit target for the short hedge at 99.50.
Wednesday, June 5th
USDCHF Long Recommendation
We recommended a long position at 0.9470 with a take profit target of 0.9670 (USDCHF Support Zone). This pair also triggered our stop sell order at 0.9400. We suspended our second entry due to the NFP report and plan to add a second position on Monday between 0.9320 and 0.9370, the same level we had initially recommended. We closed our short hedge for a profit of 102 pips while the open long position carries a floating trading loss of 113 pips.
Thursday, June 6th
AUDJPY Long Recommendation
We recommended a long position at 0.9400 with a take profit level of 0.9600 (AUDJPY Falling Wedge). This was an add-on trade to our initial long position we took on May 30th at 97.30. This pair also triggered our stop sell order at 93.25 which we closed for a profit of 200 pips while the two open long positions carry a floating trading loss of 608 pips. This represents an increase of 516 pips compared to last week. We will maintain our take profit target of 96.00.
Exit from trades of previous weeks
AUDJPY Hedge
In addition to the open AUDJPY hedge of this week which we closed for a profit of 200 pips we also closed our hedge from May 31st for a profit of 250 pips as our take profit target of 94.00 was triggered.
EURAUD Hedge
We closed our open EURAUD hedge on June 6th for a profit of 392 pips as we closed this trade at 1.3877.
GBPUSD Long Trade + Hedge
We closed one of our long positions for a profit of 439 pips on June 6th and also exited a hedge for a loss of 136 pips for a total profit of 303 pips.
USDCAD Short Trade
We closed our open USDCAD short position on June 6th for a profit of 103 pips. GBPCHF Short Trade
GBPCHF Short Trade
We closed both our GBPCHF short positions for a loss of 655 pips on June 7th in line with our new strategy to reduce exposure to older positions.
We had a total of three trading recommendations this week; two new positions and one add-on trade. We closed one new trade for a profit of 110 pips and exited one hedge for a profit of 102 pips for total profits from this week’s recommendations of 232 pips. The open position from this week carries a floating trading loss of 113 pips. The add-on trade currently carries a floating trading loss of 608 pips after we closed the hedges for total profits of 450 pips.
We also closed four older positions for a profit of 798 pips which brought our total profits for the week to a record-breaking 1,460 pips. This allowed us to exit both out open GBPCHF short positions at a loss of 655 pips in order decrease floating trading losses and free up trading capital which resulted in total profits of 805 pips for the first week of June; another record-performance.
In addition to the one new open position from this week as well as the add-on trade we also carry six trades from previous weeks. We have three open NZDUSD positions, two long positions and one short hedge, which currently carry a floating trading loss of 219 pips. This represents a decrease of 101 pips compared to last week. We expect to close our hedge next week and maintain our take profit target of 0.8235.
We have three open GBPUSD positions, two long positions and one short hedge, which currently carry a floating trading loss of 1,457 pips. This represents a decrease of 899 pips compared to last week. We will maintain our take profit target of 1.6000.
We have four open EURGBP positions, three short positions and one long hedge, which currently carry a floating trading loss of 1,259 pips. This represents a decrease of 163 pips compared to last week. We will maintain our take profit target of 0.8275.
We have two open EURAUD short positions which currently carry a floating trading loss of 1,776 pips. This represents an increase of 768 pips compared to last week. We will maintain our take profit target of 1.3000.
We have three open AUDUSD positions, two long positions and one short hedge, which currently carry a floating trading loss of 490 pips. This represents an increase of 75 pips compared to last week. We seek to exit our hedge next week and maintain our take profit target of 0.9830.
We have three open AUDCHF positions, two long positions and one short hedge, which currently carry a floating trading loss of 673 pips. This represents an increase of 257 pips compared to last week. We seek to exit our hedge next week and maintain a take profit target of 0.9400.
Our total floating trading loss for the week stood at 6,595 pips. This represents a decrease of 183 pips or 2.70%. We have outlined our goal to reduce our floating trading losses by an average of 600 pips per month while we maintain our monthly profit target of at least 1,200 pips per month. We have also implemented an additional strategy which will allows us to reduce floating trading losses in weeks of high profitability, as witnessed this week, as we close losing positions in order to streamline our portfolio faster.
GBP related trades account for 2,716 pips or 41.18% of all floating trading losses and are down 1,786 pips or 39.67% compared to last week. This reflects a combination of a strong rally in the GBP as well as the exit of our GBPCHF positions. We currently carry three GBPUSD positions as well as four EURGBP positions and we plan to continue to cut our exposure to the GBP over the summer.
AUD related trades account for 3,547 pips or 53.78% of all floating trading losses and are up 1,616 pips or 83.69% compared to last week. The EURAUD accounts for 50.07% of those losses. We plan to tackle this trade next during a high profit week. In addition to the two EURAUD positions we also have two AUDJPY positions, three AUDUSD positions and three AUDCHF positions.
We hope you enjoy your weekend and that we will see you back on Monday.