Trading Fatigue

“When a man is tired of trading, he is tired of life.” If Samuel Johnson were alive today and running a hedge fund portfolio, he might well have uttered those words. Being tired from trading, on the other hand, is an occasional fact of a PM’s life. And at the moment, Macro Man is pretty fatigued.

When one has a big bet in place that starts to go wrong, he has two options: stick with it and wear the drawdown, or trade ‘em up. There isn’t necessarily a single correct answer, as the appropriate response is shaped by level of conviction, market positioning, and one’s own return and risk profile.

In any event, regular readers will know that your author has been running a short equity position, which was working swimmingly until about 10 am London time on Monday. Since then, obviously, global equities have stormed higher, leaving Macro Man facing the choice mentioned above. And he’s decided to trade ‘em up.

So yesterday he traded Eurostoxx futures, S&P options, AUD/NZD spot, USD/BRL options, silver futures, oil futures, Bund futures, and Bund options. The fruits of his labour were largely successful, but it’s left him too tired to come up with a coherent piece this morning (or, as a reader pointed out, anything like the requisite level of proof-reading of yesterday’s post.)

Given that there is some interesting data, earnings releases, and other issues today, it seems like a perfect opportunity to revive the “running diary” format. So away we go….

8.57 a.m.: So CIT (NYSE:CIT) halts trading last night and a story circulates that they’re on the verge of a bailout. Then, after the close, the story leaks that they’ll be left to their own devices. WTF? Did the Treasury do a quick survey to see who held their $70 bio or so worth of debt, discovered that it was no one important, and decide to leave CIT to the wolves? Enquiring minds want to know….

9.14 am: Some mumbles about a Chinese RRR hike, and equities are at their lows of the day. Helicpoter Wen getting nervous?

9.28 am: First day trade of the day goes sour; selling the break of the lows in Eurostoxx wasn’t a great idea. Back to the drawing board…

9.59 am: Gym before Nokia earnings (@ 11 am London) or after JPM (@ 11.30?) Macro man’s humming and hawing…

10.21 am: After JPM it is, as Macro Man’s spent the past 20 minutes discussing the literary merits of Gabriel Garcia Marquez and Arturo Perez-Reverte with a couple of colleagues.

11.01 am: Nokia looks a tad light on both EPS and revenue basis…VG1 falls 7 points. Yawn.

Subscribe by RSS Subscribe by Email