Open trading account 
July has been a tough month for me. I expected this because my systems follow either trends or momentum, both of which have been lacking this month. I ended the period down by 45,000, after a large margin call on the last day.
This event is the perfect ilustraion why trading was hard in July. I was heavily long the US Dollar going into the U S Employment Cost Index, which is usually a non-event. This time though, the miss of forecasts (0.2% vs 0.6%) caused a major sell-off in the Dollar. But the sell-off was short-lived. The Euro rallied to 1.0972 to a high of 1.1134 one hour after the report. Then a slow descent started that took the single currency back down to 1.0983. We saw a similarly strong reversal in most USD pairs, although only the Euro reversed all gains.
You can try and rationalize the market's reaction. The low wage growth leads to the Federal Reserve delaying its hike from September onward. But then why the large reversal? I can only explain this with the low liquidity in summer. As I noted in my article, this can lead to range-bound and erratic price movement.
I've tried to negate this with holding positions longer. until they turn around For example I was short the AUD/JPY for the entire last week, at 89.63. The pair closed the week at 90.45.
I think the problem is, unlike trend/ momentum trades range-bound trades require lot more room to work, as we saw on Friday. Stoploss need to be larger and consequently the size of my positions needs to be much smaller. I will experiment with this in August.
This event is the perfect ilustraion why trading was hard in July. I was heavily long the US Dollar going into the U S Employment Cost Index, which is usually a non-event. This time though, the miss of forecasts (0.2% vs 0.6%) caused a major sell-off in the Dollar. But the sell-off was short-lived. The Euro rallied to 1.0972 to a high of 1.1134 one hour after the report. Then a slow descent started that took the single currency back down to 1.0983. We saw a similarly strong reversal in most USD pairs, although only the Euro reversed all gains.
You can try and rationalize the market's reaction. The low wage growth leads to the Federal Reserve delaying its hike from September onward. But then why the large reversal? I can only explain this with the low liquidity in summer. As I noted in my article, this can lead to range-bound and erratic price movement.
I've tried to negate this with holding positions longer. until they turn around For example I was short the AUD/JPY for the entire last week, at 89.63. The pair closed the week at 90.45.
I think the problem is, unlike trend/ momentum trades range-bound trades require lot more room to work, as we saw on Friday. Stoploss need to be larger and consequently the size of my positions needs to be much smaller. I will experiment with this in August.
