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Thursday, 8 August 2013

July update

July was frustrating : after getting payrolls right and seeing a fresh high water mark, I was too slow to reduce in the face of the Fed's jawboning. As usual, when you start trying to defend P&L I ended up buying highs and selling lows, until I got fed up with my own wrong-headedness and cut properly just after mid month. Net-net, July ended up with a 12.6% loss, split between the following areas :

Equities
   UK               -0.9%
   Japan            -0.6%
   US                -1.2%
Fixed income
   US                -6.8%
   UK               -0.5%
Commodities
   Gold             +0.4%
   Copper          -1.8%
FX                   -1.3%

The driver has been US fixed income, not surprisingly. The data has been extremely strong in my opinion, payrolls notwithstanding. Rates did actually move marginally higher over the month, which makes a loss in this area even more inexcusable. New month resolutions :
- don't spend money on option premium
- run smaller positions
- don't trade reactively
Remaining positions are short AUD against USD and NZD, despite it being a very consensus trade, short EDZ7 and TYU3 and short gold again, all in less than half the size of late June.

All basic stuff. The most frustrating part is that if I'd had the discipline to do absolutely nothing at all I'd have made money in July. Time for a refresher course in trading discipline.

3 comments:

  1. hi alastair

    understand the frustration

    why do you state not to spend money on option premium?


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  2. Hi (sorry for slow reply btw). I'm wary of spending money on options because a fair amount of my loss last month came from time decay, and markets were stuck in something of a lull over the summer. As a general point, I find that options make it easy to be half-committed to a trade - ie when you like an idea but you're not 100% sure then it's tempting to buy a call or put strategy instead of having an outright position. For me that's usually a danger sign, as I make most of my money on trades that are so cheap or expensive that an outright position is the right course. That's also the case with my P&L : options tend to break even, and outright positions make a lot more.

    ReplyDelete
  3. thank you - i hear your thoughts

    ReplyDelete