Volatility is still hampering the market but the markets, they are a changing. We went into July with several things on the minds of traders including potential fall-out from the Brexit, weak earnings growth, central bank expectations, oil price rebalance and forward economic growth outlook. It turns out that the general assumptions of the market, many of which I shared, were just not right… at least, they turned out to be a little different than what we expected. This did not stop me from trading, and it did not stop me from profiting. For the most part market movements were sluggish, summer trading volumes are to blame for that, but at the same time easy (easier) to capture once they began. The key, remain flexible and don’t be afraid to reverse your analysis if the signs are there to support it. All in all there were 4 Monday’s in the month, I made 20 tips and won 17 of them. My win rate for July was 65%, well above profitability, and my total return on trading is just over 20%.
Geek’s Binary Options July Earnings
Total Cost Of Trading = $10,000
Total Returns = $12,025
Total Return On Investment = 20.25%
To recap events in July; the Brexit did not affect the market as expected, we had a quick fall but then a bounce that took the US indices to new all time highs. Earnings were better than expected, but not much and still negative, the worst part is that forward growth outlook has fallen with next quarter turning negative. Central banks were expected to weaken the euro and then yen, and strengthen the dollar. The banks did in fact behave as expected, just not as much or more than expected so were priced into the market already and resulted in moves opposite of what could have/would have happened otherwise. Oil prices hit a ceiling as supply concerns overshadowed possibilities of demand growth and/or production declines, as well as tepid economic data. On the economic front, the labor market remains healthy, the consumer is getting better and better, but there are risks and still no sign of improvements in manufacturing.
What Happened In July?
I’ve already gone over what happened in July, informationally. In terms of the market and trading what happened was summer seasonality. The summer is well known for low volumes and range bound trading. This is because most of the “big” money, that money controlled by institutional investors, goes on vacation after setting itself up for what the summer is expected to bring. This leaves only a few traders, retail traders for the most part, to move the market and we all know that moves driven on low or light volume are doomed to failure, or at least to not play out as they would under normal market conditions.
Week One July 5th
This week was shortened by one day due to the US Independence Day holiday. It was also affected by the Brexit vote, the Brexit sell-off and the much unexpected Brexit Bounce. At the same time central bank outlook was moving currencies, and earnings expectations were shifting. This was my worst week but fortunately, was my worst week, it only got better from here. I made five trades, as usual, but only won 1 of them, totally sucky.
Week Two July 11th
This week was much better. It was still about a week or so before the big central bank meetings were expected, earnings season had not yet fully started and a referendum in Japan reaffirmed the government of Shinzo Abe. The market was bouncing off the Brexit low, US stocks broke to new highs, and I did pretty dam well if I do say so myself. Out of 5 trades I won 4, only losing out to gold which was wiffle-waffling on geopolitical/central bank concerns and economic data.
Week Three July 18th
Moves begun the previous week continued. The equity market was still moving higher, oil prices continued to fall from the $50 level and currencies were moving in tandem with central bank outlook. It was not my best week of the month, but it sure wasn’t my worst either, winning 3 of my 5 trades. I lost on gold and the yen, gold due to shifting currents in forex, a decline in flight-to-safety and expectations for a stronger dollar. The yen trade went sour due to an unexpected delivery of stimulus from Japan that was less than expected (they had been looking for it, but it was expected later in the summer).
Week Four July 25th
This was my best week of the month. I’ll go ahead and say it, I won all 5 trades hell yeah! Going into August, the market is setting up for some big moves in all asset classes. The dollar is weakening, gold is moving higher and equities are on the verge of correcting. These moves should be good for the month, trade in those directions, but be wary of support/resistances and look out for a return of market volume towards the end of the month.