Winning, but still feeling like you lost

You're going to need to read Sundays post to understand this one.

That illiquid stock I bought 3x the average daily volume of on Friday traded zippo shares Monday. So my plan of getting the quick reaction was not materialising. I had left a decent size offer and bid (since Friday) in the stock with a spread of 2.8%. The cocky mini market maker put his shares in front of me both sides. I thought: "Whatever" as he only put 25% of my size on each size.

But in the market you often get paid for the risk you take. And Friday I took quite some risk when looking at how much this stock normally trades. Even though that bid and chart pattern signalled some serious buyers slightly below the market level at that time.

Today however the mini market maker and myself got lifted. I had around 40% of my position on the offer with a 2% profit. The next 40% I put at 4% profit and the final 20% at 5.5%. At the moment I have just 5% of my position open. So I've closed at a 3% profit (as good as, all I need to to is hit the bid with my remaining 5% size).

Funny thing is, now of course I'm annoyed that I put 40% at 2% profit instead of scaling it higher up. Then again yesterdays zero turnover prooves that this stock is a gamble regarding when volume will come. Could also be, that my decent offers, in this otherwise pretty much empty order book, attracted buying.

I still enjoy small caps though, cos you are acting in the old fashioned market, with small players, humans, not machines.

Small Caps & Me

Friday I got tempted into a position for an account I manage. The stock, a niche machinery maker with solid dividend paying trackrecord, was down over 5%. I have to add here, that I watch the most volatile stocks on a regular basis every several hours. Just a habit I've picked up to see what's moving quickly. I'd also recently seen a presentation of this company and they were saying some pleasing things about the potential in India.

So I have this stock that I'd be comfortable owning, down over 5% and a 3% dividend payout coming soon. I judged that the stock was just seeing a large seller interested in selling quickly. That normally is a bad sign alone. But this stock is very illiquid and 15minutes or so after a large'ish offer appeared at -5% a bid came in - matching the size of the offer - at -7%. I thought: Okay, there's interest down there. I checked it on a chart and saw that the -7% figure was where there had been support several times in past weeks, but it always bounced back up from -7% to 0 to +5% - so a potential move of 12%.

I decided to pick off half the offer and see if the seller would reload or offer some more a bit higher. I also put in a bid for the offer balance at -6% to see if anyone hits it and also a offer at -3% (that sometimes gets a seller to add some more sales into order book). No-one did hit my bid, and 30min later I bought the rest of the offer. 

The stock closed at -5% for the day.

I'm not sure what I'll do with it. My favoured scenario is, that it bounces back Monday of course, as there was no news out Friday to get it knocked the way it was. But I could be in for trouble if the general market sentiment is going to take a beating or if the seller just comes back with the same size day after day.

Will keep ya posted!

EURCHF +10.1pips

Open time: 23-03-2010 22:07:48 CET

Close time: 24-03-2010 12:43:59 CET

P/L USD: 94,39

P/L Pips: 10,1

Open price: 1,42738

Close price: 1,42839

I have to look at that small profit as something I can relate to day to day. So from that perspective my little bet on EURCHF filled my petrol tank and bought me and a companion a light lunch in the sun.

I was wrong with my recent statement, that only when SNB intervenes on EURCHF is it much to trade. It's had a pretty hard fall compared to what it did at the turn of the year.

At the moment headlines are way too negative on the EUR I feel. After all: the US and the UK are the ones with the serious sovereign debt problems looming over the 2011/12 horizon.

Some Ramblings - No FX Interests Open

I've been tending to a new pet project in the last days and only check the FX rates 10x a day. But I've found myself annoyed at missing a 150bp move on GBPCHF from below 1.6000 to 1.6150. 

Also been doing a few equity trades unrelated to my personal account in the past two months. Sad to admit that I have underestimated this bull run. I did increase exposure for the managed acc in the second week of feb, only to reduce prematurely the second week of march.  Now I'm going into dividend paying season underweight. Not a good thing.  Especially as the return I generated with the trading is only 2% or so higher than the expected dividend yields on the specific shares (4%-6%).

All the sovereign debt crisis issues seem to be melting away across the CDS universe, with spreads narrowing significantly. That contrasts with some action on FX:  My pet the swissie is still strong against the pound, but has bounced off the recent lows of 1.5930s to 1.6140. It's a wild ride that pair.  Also watching the EURCHF that is on track to take out multi year lows of 1.44. It's not a good pair to trade unless there's intervention going on.

GBPCHF +24.3 pips

Well sold with 24.3 pips profit. Hadn't seen much downside during the holding period.

Open time: 12:03:28

Close time: 14:21:49

P/L pips: 24.3

P/L USD: 229.31

Open price: 1.59324

Close price: 1.59567

GBP Is The Canary In The Mine! It's Dying!

Just looked at GBPCHF. Safe haven swissie the place people running to.

This looks like the first signs of major sovereign debt crisis to follow this year.

Just wonder if M&A activity will pick up now and keep shares stable, or whether financials start tanking again on crap US housing, chineses growth fizzling, PIGS - consumers not spending, UK consumers closing their purses.....

The trader in me wants to buy GBPCHF 1.5985 though. But fundamentals don't look sound at all. No idiots are selling it like they are!

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1400CET edit:

So I didn't get in at 1.5985, but at 1.5932!

I must say I've been both annoyed and happy 2x since having bought!

At the mom it's looking like breaking out of the bottoming process!

But I'll sell into that soon ...

UK joining the PIGS?

RE: UK Industrial production numbers today....

"could indicate a profound weakness in production and demand, pointing to a much weaker Q1 GDP outturn than the 0.5% q/q growth we expect. This would be consistent with Governor King's remark that the economy was "bumping along the bottom", and raises the risk of a "double dip" in GDP. "

"Alternatively, however, the January outturn could prove to be erratic. There are two pieces of supporting evidence for this hypothesis. First, the manufacturing PMI hit a 15-year high in January and stayed there in February.[...] Second, both retail sales (according to the BRC) and housing market activity (according to the RICS) were weak in January, largely on account of the poor weather, but rebounded in February." BarCap

I think I would be more inclined to believe number 1. Everyone is saving money, holding back purchases after getting caught up in the xmas shopping frenzy?

GBPCHF +13.1pips

It was showing me -350 $ after 1-2 hours. So the usual syndrome: Selling into upmove!

Open @ 1.61244

Close @ 1.61375

P/L Pips: 13.1

P/L USD: 121.44

Open Time: 08:13:18

Close Time: 13:14:34

Which part of the cycle are we in?

Is the question even valid?

If we were in a normal business cycle the banks would have had good performance at the outset. *Check*

We'd see a pickup of M&A activity and consolidation. *Starting to happen?!*

The late-cyclicals have only seen a stabilisation of revenues and orders on rather low levels and not really organic growth like you'd want to see. Except in Asia right? So are they going to come into the land of green shots this spring/summer? *My opionated guess yes*

But these would be the last to come out of this recession that has had a duration of five quarters.

So when will it be time to call the top. Dow 14k ? :)

Also: Economists I follow see more and more to suggest there is a broadening of the recovery.

So are we seing a recovery squeezed into a shorter period of time, or is what we are seeing at the moment normal and will it continue well into 2011? :S

If we see good activity in markets this summer the ECB and Fed will have to hike interest?

So many questions!

1st Trade of 2010

My broker has changed plattform. I now see charts with a blue arrow head where I bought and sold. Cool. Well I put my money where my mouth is (see previous post) on a pure sentiment call. The drop in GBPCHF having been too strong for my taste.

I guess I'd be okay holding this position longer in principle. But the +360 I just had to take now. Annoyed I didn't catch the 1.6165. But as I bought yesterday evening CET at around 1.6104 I won't complain.

It's kind of stupid of me though. My gut tells me a jump back to 1.64 are on the cards no matter if there's a hung parliament or not!

Edit: 1.6190 now. God I'm a moron :D

Edit 2: exact P&L

Open: 1,61076

Close: 1,61467

P/L Pips: 39,1

P/L USD: 364,36

What sucks: Cos I am below 24k USD on the account I have to pay 4pips spread or more... 70 USD of my profit for the broker :(

Sterling: Great for importing UK goods

I'm starting to like the idea of buying assets, goods in the UK!

Close to 5% devaluation just like that on some crosses in last weeks. Seems like a good idea.

Problem is, what does the UK make that I want to import? :S

Anyone got any ideas? :D

Interesting area approaching on GBPCHF 1.60. Will be interesting to see if it holds there ! Acutally more important for medium term was breaching 1.62 I guess. Think this pair is going to get me off the sidelines!