Monthly Archives: February 2012

This is our fifth and final installment of the trade leader interview series. In this post we ask three of our Trade Leaders what they think about volatility, trading strategies and the Euro. The traders are Janus Investments (Ticker: JASMI.I), Chen Investments (Ticker: CHCMP.S) and BAK Trading (Ticker: TCBRF.A).

Janus Chen BAK Trading Currensee

 

1. Do you believe 2012 will be as volatile as the end of 2011?

Janus: 2012 will bring more volatility than 2011, but in a smaller range than 2010 and 2011, because central banks will intervene to dampen volatility trying to set upper and lower boundaries.

Chen: Yes, it will be more volatile.

BAK: Yes, but volatility will only be 60-80% as 2011's ending months. The most volatile period is probably already over.

2. What types of Forex strategies will continue to prevail in 2012?

Janus: A portfolio of different non-correlated strategies will work in any market.

Chen: I think any strategies which can live well in 2011 will still have a chance in 2012, but we have to adjust our strategies to suit a riskier market.

BAK: Scalping and swing. Position trading will not prevail in 2012.

3. What would a breakup of the euro mean for your strategy?

Janus: No change, our strategies are not based on long-term trends (monthly, yearly), but on short-term price action (intraday).

Chen: This is something tough for us to think about. I feel the only thing a trader can do is have proper "stop losses" in place.

BAK: Not much as I only focus on ultra short-term changes of major pairs. The Euro currency should still be around, at least for Germany, France, and a few other countries.

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 2/27/12

As Hollywood celebrated the Academy Awards Feb. 26, the world watched “The Artist” snag five trophies and Meryl Streep receive her third Oscar win. On the financial stage, eyes cast on the German parliament, Greek finances and U.S. economy confidence.

After agreeing on a new rescue package for Greece Feb. 20, the eurozone stepped back into the spotlight as German Chancellor Angela Merkel won a parliamentary about Greek aid from the Bundestag—the lower house of the German parliament. The vote favored the 130 billion-euro package to help Greece. She cautioned her fellow lawmakers that pushing Greece out of the euro would result in failures for the European Union and global economy.

Merkel also spoke about the European Stability Mechanism, saying Germany was willing to expedite payments to the ESM—the eurozone’s primary bailout fund—if other European members followed. She said Germany was willing to pay 11 billion euro to the ESM to accelerate funding. Regardless of adding new money to the fund, some German lawmakers believed that a third Greek rescue package could arise because they felt that even new funds would not right Greece’s finances. Aside from discussions about Greece, Germany saw positive news in its IFO (the country’s No. 1 think tank), predicting an increased business climate. The nation’s rating jumped to 109.6 points, better than the expected 108.7. A higher IFO showed dwindling signs of a German recession.

In the U.S., economists continue to see financial optimism. As many Americans ushered in the weekend, the Standard & Poor’s 500-share index finished Feb. 24 at its highest point since 2008. The S&P closed at about 1,365 points—the highest mark since June 2008 before the worst of the financial crisis. The good news continued with signs of a growing economy. The National Association for Business Economics said the U.S. economy will rise 2.4 percent in 2012. The NABE February survey also showed expectations of an average unemployment rate of 8.3 percent, with the economy adding about 170,000 jobs a month in 2012.

For hedge funds in 2012, investors forecast $250 billion in new assets, with net inflows of as much as $140 million and the rest coming from investment returns. According to the Morningstar MSCI Composite Hedge Fund Index, hedge fund performance in January jumped 1.9 percent—the largest monthly gain since December 2010.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

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The US economy is on the mend and a self-sustaining expansion appears set to take hold.  At least, that’s the verdict of most Wall Street economists, following the latest slew of economic data, which showed that non-farm payrolls increased by 243,000 last month – the largest number of net additions since last spring and, that the unemployment rate dropped to 8.3 per cent – the lowest reading since February 2009.

Further, the newfound cheer in the labour market has been accompanied by the return of American households’ vociferous appetite for new borrowing.  Indeed, consumer credit advanced at an annual rate of more than nine per cent in December – on top of the eye-popping near-ten per cent jump the previous month – to bring the annual rate of growth in the fourth quarter to 7 ½ per cent, the most rapid rate of increase in more than a decade.

The headline numbers would appear to suggest that the previously beleaguered consumer, the primary engine of economic growth, is back in the driving seat and set to propel the economy forward.  However, first appearances can be deceptive and a more considered analysis of the data reveals that the grounds for optimism may not be as robust as the bullish commentators seem to believe.

The notion that the labour market is in recovery is not in dispute but, the headline numbers almost certainly flatter to deceive.  The unemployment rate has dropped almost two percentage points from its cycle peak of more than ten per cent during the autumn of 2009 but, the improvement is exaggerated by trends in the labour force, where numbers have declined by 2.4 million since the end of the recession more than 30 months ago, and stagnated since the summer of 2007.

Numbers in the labour force have failed to keep pace with the natural growth in the working-age population, which amounts to roughly 125,000 every month, and as a result, the participation rate has dropped to the lowest level since the summer of 1983.

The underlying increase in the working-age population since the economic recovery began two-and-a-half years ago, suggests that the labour force should be near 160 million – more than six million above the documented number – in which case the unemployment rate would be close to 11 ½ per cent and, that sobering statistic is before consideration of the countless Americans that are currently reported as underemployed.

Back-of-the-envelope calculations reveal that the labour market remains oversupplied, but the harsh reality is disguised by the fact that potential workers have been leaving the labour force in their droves due to the general absence of employment opportunities.  Individuals of working-age are not included in the labour force if they retire, return to full-time education and are unavailable for work, simply give up looking for gainful employment, or are institutionalised.

Working-age individuals who have simply given up looking for work capture the largest share of those who have left the labour force by far, but those who have returned to school are a significant component and help to shed some light on the recent trends in consumer credit.

Note that non-revolving credit outstanding jumped $22 billion over the past two months and federal government loans, which include student loans, accounted for almost 70 per cent of the increase.  Further, outstanding federal government loans have surged 2.4 times over the past two years to more than $425 billion, as the demand for student loans leapt exponentially.

Federal and private student-loan debt combined is rapidly approaching $1 trillion and exceeded credit-card debt for the first time in 2010.  The trend is disturbing because the debt burden for individual borrowers is far higher given that there are considerably fewer people with student loans than there are credit card holders.

Student-loan debt has increased for every age group over the past three years according to CreditKarma, the credit score tracking site, but the pace of growth among those aged between 35 and 49 has been staggering at almost 15 per cent a year.  Further, loans to parents for the college education of their children have soared by 75 per cent over the past five years and, the estimated payback figure has jumped to an estimated $50,000 for parents over a standard ten-year period.

Needless to say, signs of stress are beginning to emerge.  Indeed, a survey by the National Association of Consumer Bankruptcy Attorneys (NACA) reveals that more than 80 per cent of bankruptcy attorneys say that the number of their potential clients with student-loan debt has increased ‘significantly’ or ‘somewhat’ over the past three to four years.

The trend is disturbing as almost all of the attorneys surveyed believe that extremely few borrowers will be discharged from their loan obligations as a result of undue hardship.  Indeed, NACA reports that, “For those with federal student loans, the government has collection powers far beyond those of most creditors. The government can garnish a borrower’s wages without a judgment, seize a tax refund … and deny eligibility for new education grants or loans.”

NACA notes that, “There is no discharge in bankruptcy for federal loans except in extremely limited circumstances,” and that, “Unlike any other type of debt, there is no statute of limitations. The government can pursue borrowers to the grave.”

Recent economic data has seen the enthusiastic bulls hail the arrival of a self-sustaining recovery.  Not for the first time, the analysis is decidedly myopic and a closer examination of the facts reveals that the conclusions are premature.

 

Previously posted on www.charliefell.com

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

FINalternatives is the premier, independent source for news on the alternative investment industry. They wanted to learn a little more about Currensee so they called our CEO, Dave Lemont, for the inside scoop. Here are a few questions and answers from the interview. The entire transcript can be found here.

Can you tell me something about Currensee?Dave Lemont Currensee

We’re all about creating an alternative investment for the world’s currency markets, that’s the mission of the company. We’ve essentially created a completely new way to invest. We find emerging managers all over the world and then you…can build your own little fund of funds directly on the internet by selecting these Trade Leaders that we present to you—and by the way, we do a ton of due diligence on them...You pick them, you build your fund and in a single account, you can have multiple managers, and we replicate the trades from the managers’ accounts into your account.

The other cool thing is, because it’s foreign currency trading, it’s not correlated to the stock market. It’s very much of an alternative investment. And based upon how volatile the stock market has been this year, people need alternative investments. And the other beauty is, you don’t need to know anything about foreign currency trading—all you need to know is how to read a performance chart on risk and reward, the same as you’d read a performance chart when picking a mutual fund. It’s a very powerful alternative investing tool….And the returns have been very exciting. It’s really possible to build a very exciting portfolio for yourself or select a single Trade Leader, as we call them.

How do you choose your Trade Leaders? What criteria do you use?

We’re looking for emerging managers, and by emerging managers I would say these are professional people that have experience managing money —somewhere in the $1 million to $25 million range. Not that we would reject someone managing more, but we’ve also found that people managing tons of money no longer have the returns. And so we’re looking [for managers] at the right stage of their career, where they’re building their career and essentially, their challenge is gathering assets, but they’re fantastic traders…They do it all day long, it’s their only job, it’s the way they make an income. We give them the platform to gather the assets and they do what they do best. We take care of the rest.

As for the Trade Leaders, let’s face it, we’re picky. We’re looking for managers who have strong returns, meaning the returns should be anywhere from 1% to 10% per month, but their drawdowns are below 20%, hopefully below 10% in terms of the maximum drawdown that they would ever experience…And the most important thing, I would say, is people that manage their own money in a very disciplined manner, by that I mean, if they have a strategy that says, ‘I’m willing to risk 1% of my account on my trading day,’ that when they’re losing, they close. When they’re winning, they take their profits. Somebody that has a strategy and they exhibit to us that they are honoring that strategy to the ‘T.’

Now, the way we do due diligence is, we have a pretty strict process they have to follow: We interview them, we review their risk management practices, we run background checks, we invest with their system, with our own dollars, in a live account, and…we make sure that what they say they’re going to do is what they really do. And then we test the replication side of it, so we need to make sure that when we replicate their trades from one account to another that our correlation is strong.

Who is your target client?

One is [the] foreign currency traders…that aren’t very effective on their own…and they’re looking to diversify their trading by following someone who’s a great trader. Most Forex traders lose money and our program gives them a way to be in the market by putting Trade Leaders to work for them. But the bigger market that we’re after is what I would call the ‘active investor.’ The active investor is someone who, he may trade managed futures or ETFs, or he’s very active with his financial advisor, and he’s always wanted to take advantage of foreign currency markets but he doesn’t know how to trade. He wants to participate in alternative investments, and we’re perfect for him.

The other market [is] institutions. We continue to build partnerships with large hedge funds, family offices, funds of funds, and other asset gatherers. These folks are simply looking for great traders that offer alternative investments, and they love the fact that we allow the risk to be controlled…

What kind of risk control do you offer?

There are three risk controls: an overall drawdown control, that when you’ve lost a certain amount, the system will stop. An open drawdown control, so just the open positions tracking and then a leverage control that allows you to de-lever, so, if the Trade Leader trades like, 5 to 1, you could say, ‘I only want 50% of that,’ now it creates a 2 and ½ to one leverage. If the customer is a high-net-worth person who signs a special contract, they’re allowed to lever up. But only if they sign a contract that says they understand the risks. So they may say, ‘Well, this guy is pretty conservative, I might take a little more risk than he takes and double the size of his trades.’ And we’ll allow you to do that, but you must sign a special agreement for it.

In our software, if you were to follow Trade Leader 1 and Trade Leader 2 and Trader Leader 3 in your single account, we allow you to set drawdown controls on each one of these leaders, and even the amount of leverage they control. So, you can say, ‘I don’t ever want to lose more than 5% or 10% or 2%’ and then, if that were to happen, we shut the system off….Part of trading is not just winning but controlling when you lose and [trying to ensure] that the day you lose is not such a terrible day that you can’t recover from it.

These controls are extremely popular with the high-net-worth and the institutional market for us. When a pair that a Trade Leader trades—foreign currency traders trade the dollar/Swiss or the dollar/yen—feels too volatile, the investor or asset manager can say ‘I don’t want to see any trades from this pair in my account today,’…You are able to have that level of control.

Click here to read the full article previously posted on www.finalternatives.com

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

A while back I wrote the blog post Be Careful Trading Against the Masses. In it I talked about how much trouble one can get into thinking that the bulk of retail traders are generally wrong and thus that you should trade against that collective. I can't blame people for that attitude as it's been put forth among market participants for decades. The problem is the masses aren't as wrong as you might think – at least in the short term.

Tuesday on CNBC there was a representative of FXCM on the broadcast and one of the things he talked about was research they did looking at their customer accounts. He put up three pairs on the screen showing the win% of FXCM account-holders for trades done in each of those pairs. The best one was AUD/NZD which was above 70%. Granted, that's not a pair a lot of people trade, so the data might be a bit less significant than others, but even EUR/USD was in the 60% area. In other words, retail traders get it right more often than not, so you don't just want to fade them.

Winning often, but losing money
Now here's the rub. These same traders are losing money because their winners are much smaller than their losers. The FXCM guy actually showed the comparison. It was a very direct indication of the old wisdom that losses need to be cut short and/or winners allowed to run. Even academics have come to realize that the human inclination is to do the exact opposite. We are risk averse, so we tend to book profits too quickly for fear of losing them while holding losers in hopes they come back.

These figures also back up comments I've made in the past (such as in Why You Shouldn’t Fixate on Winning Percentage in Your Trading) about how win% gets too much focus. If 60% of EUR/USD trades done by the FXCM customer community are winners, but the losing trades are something like twice as big as the winning ones then what's the outcome? That's right. It's a net loss.

Sometimes it's worth trying to increase Win%. For most developing traders, though, it's the size of the losers relative to the winners that are the more important consideration in need of addressing.

Don't let the marketers get you

The warning here is also that we shouldn't allow ourselves to get sucked in by marketing which promotes a high win% for some trading system or trader. If you don't have the other side the expectancy equation – namely winner/loser ratio – then you don't have all the information (you'll notice Currensee includes both sets of figures in the Trade Leader data sheets).

 

Our Two Cents – Week of 2/21/12

While many Americans enjoyed a restful holiday weekend, financial officials in Greece busily discussed and ultimately approved the nation’s new rescue plan.

Eurozone finance leaders agreed to the $172.1 billion rescue deal for Greece—a plan that would have the country’s private creditors take larger losses than previously agreed. The package could help Greece reduce its government debt from about 160 percent to about 120 percent by 2020. Greek Prime Minister Lucas Papademos called the agreement “historic,” giving his country a new economic lifeline.

Here in the U.S., economic confidence resounded. According to a new Pew Research Center poll, almost half of all Americans expect the economy to be better by 2013. Also, according to a new CBS News/New York Times poll, as many as 34 percent of Americans say the economy is getting better—up from 28 percent who thought so a month ago. One of the factors for an improved economy is jobs. Jobless claims fell to a new low, now at 348,000, and retail sales grew by 0.4 percent. In the institutional arena, hedge funds, commodity trading advisors and private equity funds are expected to increase allocations in 2012, according to an AlphaMetrix survey.

While we were reading the world’s biggest financial headlines, Currensee itself received some ink. FINalternatives profiled the Trade Leaders Investment Program, speaking with our CEO Dave Lemont. The publication said Currensee is aiming to “revolutionize money-under-management CTA world.”

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

1 Comment

I had the opportunity recently to meet with an accounting professor at a UK university.

Wait!

Before you let her primary specialization turn you away, I should say that this particular professor has been doing a fair bit of research into the impact of networks on individual performance. One of her papers looks at securities analysts in particular, but she has also done research into other types of performers, like corporate CEOs. The bottom line is that the quality of one's network is a major explanatory factor in how well an individual performs in their defined role.

Currensee is, at its core, a network of traders. The linkage is clear.

Note, however, that I specifically used the term "quality" and not "size". A massive network isn't necessarily a valuable one. That means you probably aren't doing yourself a whole lot of good "friending" everyone you come across, or who sends you an invitation. This doesn't just apply to trading, by the way. (Are all your Facebook "friends" really of any meaningful value to you beyond the vanity of the number?)

The value of a network comes down to the value of the information which comes to you through that network. Again, note that I did not use the term "quantity" here either. We are all bombarded with vast amounts of information each day. The key to success in trading, as in life, is to get the right information at the right time.

In academia the word "informed" has come to be used to refer to consistently profitable traders or investors. Basically, the idea there is that after you factor out simple luck in terms of explaining performance you have some set of market participants who make money based on their own decision-making. These participants have some kind of informational advantage over the losing traders and investors.

Makes sense, right?

The question, though, is do these "informed" folks have more information? Or do they have better information? In some cases it might be the former. In other cases it might be the latter.

Now for the real twist.

Is that more/better information a function of actual information transmission from one's network and/or information sources? Or is it a function of better information processing abilities by the individual – meaning they create through their analysis new information that is not available to others?

That latter question opens up an ability debate, one which could then be extended to the nature vs. nurture discussion made quite famous by the film Trading Places as well as by Richard Dennis and his Turtles (I actually met a new batch of Turtles recently). But I digress.

The research suggests that ability is less important than one's network. That would imply the key to trading success could be primarily a function of developing a strong network rather than in trying to figure out some holy grail trading system.

So what do you think? Are winning traders better at processing information? Or are they receiving better information from their networks?

 

This is the fourth installment of our trader interview series.  Currensee Trade Leader Adantia LLC (Ticker: ROCED.A) uses strategy that stems from their strong background in software development and is evident in their fully automated trading approach. Their founding team has over 20 years of experience in the software industry, and this is one of the company’s core strengths and differentiators. Adantia lets the software do all the work but plays close attention to the events that may impact the strategy so they can see how the model reacts.  Over the past two years we have experienced a number of “shocks” including the Flash Crash, the Japanese Tsunami, Quantitative Easing I, II and III, North Korea shelling Yeonpyeong Island, etc. and Adantia's Foreign Exchange Volatility Strategy has performed well and adapted to these shocks.

Do you believe 2012 will be as volatile as the end of 2011?Adantia Currensee Trade Leader

Yes, most of the issues that have contributed to the volatility have not been resolved and will take considerable time and effort before they are resolved:

  • The Eurozone crisis is still in full swing.  Greece, Spain, Italy and Ireland have significant issues which will drag on the EUR for some time.  The new governments in Italy and Spain seem to be taking some of the right steps, but there is still much uncertainty.
  • The Middle East is a mess.  Iran is working to become a global nuclear power, the U.S. has pulled out of Iraq and the succession of the leadership in Saudi Arabia is now in doubt.  The world still runs on oil and all of this uncertainty can rip around the markets.
  • North Korea is more of a wild card than ever.  The world knew Kim Jong Il pretty well after all of his time as the Supreme Leader.  Kim Jong Un is a virtual unknown, and the country is not getting any healthier from an economic standpoint.  This could be very bad news for South Korea and ultimately most of the world.
  • In the U.S. we have an election going on, so much will be done to spur on the U.S. economy so that the current leaders can get re-elected, BUT, many of the problems that we have in the U.S. are just being kicked down the road for the next leader to handle.  I expect employment numbers will get better throughout the year which will have a positive impact.  The partisan fighting in Congress will cause significant tension in the U.S. markets and if the leaders don’t come up with solutions then the markets are going to react.  Also, it will be interesting to see what the climate is for regulation in the U.S.  With the collapse of MF Global, U.S. Regulators could clamp down, which will have an impact on the markets as well. The Real Estate crisis in the U.S. is far from over.  The Banks own a lot of property that has yet to hit the markets and this will have a big impact as well.  Will Real Estate ever be a safe investment?

2. What types of Forex strategies will continue to prevail in 2012?

At Adantia, we think our strategy is well positioned to take advantage of the volatility that is inherent in the market.  We have been very successful over the past two years taking advantage of the tumultuous market.  We also believe that a well-diversified portfolio is a wise choice.  Alternative asset classes like FOREX can be a very important part of any portfolio and can produce returns that are not correlated to other investment types.  Within FOREX we believe investors should look to diversify using complimentary strategies.  Our Foreign Exchange Volatility Strategy tends to be counter-trend and is well complimented by trend following strategies.

3. What would a breakup of the euro mean for your strategy

Personally, I do not believe the Euro will break up.  I believe Germany and France will do whatever it takes to keep the European Union together.  The German people very successfully combined East and West Germany, and while that process was very painful, in the end they came out much stronger.  This is a different economic battle with many more countries involved, and it will be very painful, but, in the end the whole region will be stronger if the European Union is maintained.  The EUR/USD pair is a big part of our current strategy, so if the Euro were to break up we would have to remove that pair from our strategy.  We are confident that with research we could replace this pair, but it would take some time. No one can predict the future, so investors would do well to diversify and monitor their portfolios closely.  It is important when selecting different managers to make sure you are not getting too much overlap in the strategies the managers are using to truly diversify your portfolio.  This means the investors will have to do some legwork to understand the strategies the managers are using to get the returns.  Here’s hoping 2012 is a great year for everyone!

Next week: Janus Trading (JASMI.A), Chen Investments (CHCMP.S) & Bak Trading (TCBRF.A)

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Ain't it always the case that an exchange rate rallies into your trip, then starts falling after you've spent the lion's share of the money? GBP/USD did that to me. It was looking so good early in January when the rate was down the low 1.50s, but by I time I left for my trip to England last week the rate was looking at testing 1.60. What day did the market peak? The day I checked out of my longest hotel stay, of course (insert your favorite string of curse words here).

What's even more annoying is that GBP/USD really looks like it's set up for a tumble.

On the weekly chart below we can see the clear support along the line going back to the lows from September 2010 near 1.5300. That was broken during the last leg down, but the market quickly reversed back higher. It hasn't been able to push those gains to even create a test of the November peak, however, so the pattern of lower highs and lows since the 2011 highs remains in place.

GBPUSD Chart

 

These lower highs are also building a head-and-shoulders type of pattern on the chart. If we consider the peak of the pattern to be about at 1.6735, that gives us over 1400 pips in downside projection using the head-to-neckline measurement. A simple target would thus be about 1.3900. This is quite aggressive given the likely support above 1.4000 based on the 2010 lows, but it does provide a fair bit of scope as to the type of damage that could be done should GBP/USD manage a sustained break of 1.5300.

So what's the catalyst for that kind of action? The BoE has already announced GBP50bln of additional QE. That has largely already been priced in and the market isn't looking for any big additions at this point. The biggest risk factor at this point is a crank back up of the risk-off market psychology that would drive the dollar higher. If we see the S&P 500 fail to overcome the 2011 highs as part of the current rally, that becomes a very real risk.

This couldn't have happened a bit sooner?

 

Aite Group recently mentioned Currensee as one of the Top 10 Trends in Wealth Management. “Copy Trading” is listed as the #7 trend on the report and shows some very positive signs for 2012.

The report refers to copy trading as “...one emerging financial service holding promise because it improves the outlook of all three pillars of wealth management (asset gathering, trading volume and fees), particularly during this period of low yields and uncertain economic conditions.”

Copy Trading CurrencyCopy trading allows investors to follow professional traders by mirroring the professional’s trades in their own personal trading account. This allows investors to gain exposure in other markets where they might not have the time or skill to trade on their own. Copy trading is also beneficial to asset managers because it can funnel millions in AUM through their office.  Managers can offer a single trader or combine a group of traders and create a fund for their clients. In short, managers can offer their clients a viable way to invest in the currency market without being a currency specialist.

In an earlier Forbes article, Aite Group goes on to say how Currensee is the leader in educating investors and managing traders. An important part of copy trading is the proper vetting of currency traders that your clients can follow. The vetting process removes unprofessional traders who don’t have the discipline to trade successfully. By only allowing the top traders to be selected, the follower or asset manager only needs to choose few different traders to create a diversified currency investment. Following a group (or fund) of seasoned forex traders can be a nice addition to the standard equity/debt portfolio.

 

Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.