Weekly Review OpenBook Roundup

January 19th, 9:30 pm by Sam

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(eToro Blog) eToro guru: godsbounty got our attention this week for a couple of reasons. The trader had a good run this week, generating 24.9% returns and around 35.7% in return over the last thirty days. What is even more impressive about this trader is that 100% of trades were closed using Take Profits and Stop Loss. This tells us that this trader is not emotional; they set up their TP and SL and wait for the targets to hit. We have seen expert traders succumb to their emotions and push their stops out when the markets go against them or close their trades too early when they have made a few pips instead of letting the trade hit the profit target. This trader trades only GBPUSD with profit targets of 10-20% and stop loss targets of 60-100%.

The trader starts each day by identifying the support and resistance levels for that particular day and scalps on both sides as the GBPUSD trades between the levels. In the last couple of hours, the trader booked profits by selling the GBPUSD when it touched 1.5429 and switched to long positions once the pair stalled at 1.5420. The trader correctly identified the bullish trend on the GBPUSD today and closed the first leg of his long trade at 1.5443 for a 23% gain. After his TP was hit, the trader opened a second long GBPUSD trade immediately and booked another quick 10%. We see a similar pattern every day in this trader’s history.

Looking at this trader’s P&L graph, we can see that the trader’s curve traded in a range between -10% and 0% before it broke through resistance and now has been making higher highs. It reached a high of 36% on January 16^th. The trader has 5 copiers so far but clearly shows a lot of promise.

Here is a recap of this week’s major events:

Markets opened on Monday to news that S&P had stripped France and Austria of their AAA credit rating. Italy, Spain, Portugal and Cyprus were downgraded by two notches while Malta, Slovakia and Slovenia were downgraded by one notch. S&P delivered another blow on Tuesday when it stripped the AAA credit rating from the European Financial Stability Mechanism (EFSF). EU officials downplayed the issue and insisted that the EFSF’s lending capacity would not be diminished. France conducted a successful bond auction despite the rate cut; the government raised €8.6 billion and 10 year bond yields declined. The Euro staged a 250 pip rally this week after bouncing off support at 1.2650. Traders on OpenBook are primarily long the EURUSD with average limits at 1.3050 and stops at 1.2750.

The Bank of Canada announced that monetary policy would remain unchanged and interest rates would stay on hold at 1%. The BOC maintained a neutral policy, and though concerned about the situation in Europe and its effect on Canadian business investment, it balanced it with the positive outlook on the domestic front. The BOC expects growth of around 2% in 2012 and 2.8% in 2013. Policy makers are hesitant to offer any further rate cut since rates are at historic lows and financial institutions in Canada are on a solid footing. Traders on OpenBook are primarily short the USDCAD with average limits at 1.000 and stops at 1.0200.

The Australian employment report showed a loss of 29,300 jobs in December and the unemployment rate was reported at 5.2%. The data fell short of expectations and the AUDUSD dropped 50 pips. Several of Australia’s largest banks announced layoffs as operations are scaled back in light of the global crisis. Analysts expect a rate cut from the RBA at their next policy meeting. Traders on OpenBook are primarily short the AUDUSD with average limits at 1.0290 and stops at 1.0450.

The U.S. released several economic reports this week. Producer prices dropped 0.1% in December while consumer prices remained unchanged. The Empire State Manufacturing Index showed an expansion in activity. On the housing front, the NAHB housing market index rose to 25 signaling optimism among the nation’s builders. Wall Street slumped earlier in the week after the S&P downgrades but has steadily recovered on the positive economic reports. Given that, there is less likelihood of further stimulus at next week’s Federal Reserve policy meeting.

The United Kingdom reported gloomy news for the nation’s unemployed. The unemployment rate rose to a 16-year high of 8.4% and the claimant count change increased by 1,200 in December. The claimant count swelled to 1.6 million, also a 16-year high. The fate of the U.K. economy is tied intrinsically to the crisis in Europe and an end to the crisis is not seen any time soon. The GBPUSD bounced off support at 1.5300 putting a brief end to its down trend though pressure remains on the downside on the Pound. Traders on OpenBook are primarily long the GBPUSD with average limits at 1.5600 and stops at 1.5300.

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