True, totally true!
Shhh!! Don’t go telling everyone
Yes, EUR/USD is for n00bs. I exculsively Trade USD/TRY with the occasional exception of ZAR pairs as I do get a kick out of manipulating the Rand from time to time.
USD/TRY has produced 6 figure returns for me some months!
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Well, it has been a while…
Where am I at with trading, first of all?
I busted more accounts and decided to go back to square one: what is the problem? Greed.
I opened a new demo a couple of months ago now (more or less) and I have been very conservative.
The demo is a 50k and the goal is to grow the account, now to win the lottery.
I have made about three large trades and the account is up by over 10%.
Now I have decided that this poses an important question: if this were real money, would I be happy?
Yes, if you managed not to lose your initial investment of £50k AND to add over £5k to it then you
should be very happy.
If this return were to be my target for the YEAR, then I would have to do nothing between now and
the end of 2019, not even look at the charts.
Is this a good approach to trading? Maybe. Is it a good approach to investing? Definitely.
The difference is important because it dictates your approach: think of that 10% of your net target,
after losses. If you were to make losses in your first few trades and then make a big win, averaging
at 10%, would you be happy? Yes, because you could have lost more and yet you managed not
This could be very dull but… if this were real money, I would not want it to be ‘exciting’ , rather, I
would want to make sure that I was prudent with it.
My next point is: what has happened to the Lira?
Well, only a few days ago (July 2019) the central bank of Turkey, under its new governor,
cut rates by 425 points: this was not expected, yet the Lira started rallying…
Since April, Lira pairs have been moving south, down to the 200-day moving average: since
the bank cut rates unexpectedly, the 200-day MA has been breached and, in total, we have
now clocked up over 8000 pips.
Remember that the September-November/December drop in 2018 was of 20000 pips, so
this is a significant continuation of that drop after an historic run in one direction.
I have sold EUR/TRY and done well with it, but the logic of an appreciating Lira, even
under a new bank chief clearly under Erdogan’s influence, seems utterly bizarre.
Happy Trading
Nine thousand pips, and counting, since the
9th of May peak in EurTry: tomorrow will.be the
9th of August, meaning that this pair has dropped
three thousand pips per month on average, over three calendar months; this whole drop is
nearly half of the one that we saw between September and December of last year, where we saw a move spanning twenty-thousand pips.
You can also see how the (pink) two-hundred-day moving average has been breached and the pair has now closed below it for one whole trading week:
After my shorting wins with 200k positions, I took a shorter 50k poaition and have now been in a 25k position (white dotted line on the chart) for one trading week, collecting swap with low risk to my previous gains. This position should be my last between now and the end of the year.
PS: placed a limit order at 5.89, which would give me about 2800 pips, equivalent to £0.38 x 2800= £1064, plus swap (variable).
This level is based on the Nov 2018 - Feb. 2019 support level seen on the monthly chart.
After sixteen traing days below the 200-day MA, EurTRY broke back above it; here is why:
So…where are we at with TRY?
Let us leave banking, Syria, and Turkey-USA relations aside for now: let us look instead at stocks and TRY.
Six trading days ago the MSCI Turkey i-shares ETF index had a massive buying spike after days of sliding; four out of the last six days have all been buying days, with reasonably sustained buying volume:
As a response to this, TRY also rose, meaning (in reverse) that pairs like EUR/TRY have been dropping: in the last six trading days (and adding tofay) it has dropped about 1500 pips since bouncing against the 100-day moving average (red line in the chart) and about 3300 pips if taking a measurement from the top of that massive spilke six trading days ago, where it retreated all the way back down below the 100-day M.A.:
Eleven trading days ago this pair broke past above the 200-day M.A. and we are now heading steadily back toward it: will it break below it again or bounce from it?
Until then, it seems clear that buying TRY (that is, selling EUR/TRY or other TRY pairs) seems the safe option, also collecting positive swap/interest/carry each day if holding overnight.
Happy Trading!
EUR/TRY has fallen further today, in tumbling faahion, and has (for now) broken back below the 200-day moving average (pink line on the chart):
EUR/TRY is utterly decimated in four straight days of selling, 2000+ pips down:
200-day MA (pink line) utterly broken.
ETF Turkey MSCI i-shares index rose considerably yesterday with one of the biggest buying volume bars since mid-July.
This thing is a rocket.
Okay, so the next Central Bank of Turkey monetary policy committee meeting will be in one week,
the 12th September, thus the Lira surge may be vulnerable if a rate cut is on the cards.
Normally, it is a ‘buy the rumour, sell the news’, so either the markets are just pushing the Lira
up as much as they can before another rate cut of the July magnitude is delivered yet again or
they are really in-the-know and there will not be a cut of the same substance (if at all).
Here is the calendar:
https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN/Main+Menu/Announcements/Calendar
EUR/TRY has returned above the 200-day M.A. this week in anticipation of the central bank’s rate decision on Thursday, which is expected to be another cut:
Turkey’s Central Bank just announced a 3.25% rate decision today:
The currency reaction was contrary to expectation, with EUR/TRY dropping about 1000 pips in the immediate aftermath, bringing it again below the 200-day moving average:
How’s your overall performance been with this pair?
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I have been at this for a couple of years, with mixed results. August of 2018 was explosive, the pair went up like crazy during a currency crisis in Turkey after a decade of rising, so I had been adjusting my short position daily but in the end the margin call was triggered. That was my last attempt…Then I took a break from TRY until July of this year when I opened another demo account and traded the 50k up to 56k in one month, using three 200k short positions, then two 50k short positions; I then decided that this was a good profit to keep until the end of the year, so I just opened a 25k short that I have left running and it has been at breakeven a few times but it has very small pip value so I am leaving it running to collect rollover with minimum risk (so far it has collected 300 Pounds in rollover).
The bigger positions (200k) were taken due to a mix of technical and fundamental factors giving me confidence to take short-term trades leveraged up (4:1 leverage); subsequent trades were smaller (50k, then 25k) to minimise losing the profits won thus far.
Rollover/swap, that is, overnight interest on positions held open into the next day, is the main reason for trading EUR/TRY because it has the highest interest on short positions of any pairs offered by any broker: on a good day it can offer £8 per day for holding a 10k short position overnight, with an average of £2 or £3 the rest of the time (the swap rate offered changes daily).
The main difficulty with this is that if you want to go long with a large position you need to be careful not to leave it open too many days as the negative rollover/swap is quite large and unless you caught a big move up it could eat your pip profits.
So I tend to trade this pair short, like I did with other high-yielding exotics (e.g. UsdMxn), because I prefer longer trades where possibe, accumulating rollover.
In July the shorter trades were due to the pair being quite active to the downside and I wanted to take advantage of the short-term momentum: as it apprached the 200-day moving average I pulled back and lowered my risk factor.
I should add that when trading high-swap exotics it is still crucial to get pip-profits, i.e. to correctly guess the direction of travel for the pair: however, of my 6k profits this half-year, about 25% were made of the rollover/swap, therefore this is an important part of determining how you will manage such trades.
Also, exotics like TRY pairs can move thousands of pips per day but the pip-value is small: while a 200k EUR/USD position would be worth about £16 per pip, an equivalent positiin in EUR/TRY is worth… £2.85 per pip.
Finally, margin requirements are greater for these pairs, due to lack of liquidity: a 200k position in EUR/USD would need a £6.6k margin but a 200k EUR/TRY would triple that margin (£20k, to be exact). This means that leveraging up on high-margin pairs is very risky and it is preferable to balance lower-margin with longer-term exposure, i.e. opening trades that yield enough pips through momentum and a good rollover, without destroying your account.
Does that answer your question?
Yes I remember when this happened! Crazy.
Hmm. That’s a good chunk there, 25% just from swap fees alone. But yeah it sounds like it requires a lot of watching which if you think about it, you should be doing anyway. I don’t think I have the skill level though nor the emotional stability (yet!) to tackle having to worry about rollover fees. I think I have enough to worry about without it!
Let’s not even get into the margin requirements!
Some questions though: so in 2018, were you trading live then? Also, how has your performance been with major pairs?
Thanks for that detailed response!
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@ponponwei Hello, thanks, it is good to share.
I hope that I did not give the wrong impression when talking about 25% of profits being made of rollover, by which I did not mean that I had to subtract 25% from profits due to rollover: rather, I meant that the total profit was made bigger by 25% THANKS TO positive rollover. I hope that makes it clearer.
Regarding 2018, no, I was on demo. I had a bad experience in October 2015 - which I documented publicly on BabyPips through posts/ threads and a video on YouTube (because I have nothing to hide) - and that put a stop to me trading live money for the time being, by which I.mean until.I can have at least one profitable year in demo.
I tried EUR/USD but I do not understand how anyone could trade something so choppy that can take months and months to move.with any sense of direction and that has such tiny daily movement on average. I did try that but got stopped out a lot because of all the noise - it is a very crowded currency pair and it is heavily algo-traded too.
What about you? When do you think you will.go live?