This is an update to my macro-portfolio which was started on February the 29th. If you didn't read about the trades I put on, then here is the link:
http://jtatrading.blogspot.co.uk/2015/02/my-current-portfolio-oil-dollar-gilts.html
A lot has happened since then, at the time, Brent crude was way down at $48. I was very bullish on oil at that cheap price, this was because I believe the market had over-reacted and hadn't taken into account the cut in production from the big players in the oil market.
My view was profitable seeing the market realise it's over reaction and it moved back to around $60. At the time I was still bullish, however after some very strong US data and some big moves in the strength of the dollar, I believed in the short term it was best to profit take and not be exposed to large dollar fluctuations in my oil trade.
I closed out at $57.6, realising a 19.2% gain. The current has retraced a lot back to $52.6.
I will keep a close eye on oil, and hopefully the strong dollar will again push it down to prices where I believe it is over sold and cheap.
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I was also a seller of gilts at 124.2.
I believe this was the best trade in my portfolio, and I feel maybe I should have put a larger amount on the trade.
Gilts I believed were well over-bought due to inflation fears, mainly that had come about from the cheap oil. I knew this was only temporary and unless we were going to going to go into heavy deflation, then there was no way yields would remain so low.
This trade paid off, mainly because of traders taking the same view and also the rise in the oil price which is inflationary.
Due to the speed of the trade which was unexpected, I closed out of the position at 118.7 - mainly to a large correction at around 117.8. This correction has since moved to 120.4, therefore I will begin looking for another level to begin shorting again.
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I spoke about being bullish on the dollar in my last post. Where I was a seller of EUR/USD at 1.13, and also a buyer of USD/JPY at 118.4.
I stated very clearly in my last post that this was a long term-trade and based on different monetary policies. I had a 6-12 month horizon on both of these trades.
I didn't stick to my original plan and with impatient, I closed both of these positions two weeks in after very small volatility. In hindsight, I should have kept these positions on along with ignoring the fact there was little volatility as this just came after the largest volatility in the currency since the crisis. This was a silly and impatient move as I saw gilts and oil moving very quickly.
The prices are now 1.062 EURUSD and 121.3 for USD/JPY. These moves mainly came from great dollar data on employment, and also from QE programs from both Japan and Europe.
A big lesson is to be learned from this particular trade.
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In the last 8 weeks since I put these trades on, I remain exactly the same macro-economic view and I hope that I can trade this view effectively without letting charts or small news get in the way. I will begin looking at how to get into my long term view again after these large moves.
I have added two more positions to my portfolio and this is long sterling against euros and also long dollar against the yen. This is due to my view that both the Fed and the BoE have much more hawkish monetary policies and we will become to see these become real in the next year.
Along with this I am also very bullish on the FTSE. It has really struggled to get past all time highs and had actually retraced a lot back to 6700. I am long at 6819, with the view it will rise back up to around all time highs, and past it at some point during this year.
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Overall my performance is 21.2% increase in portfolio value. This is higher than expected due to the speed at which things have moved. I still remain the same view about these positions and will again look to get in at better prices.
Look forward to writing another update soon.
