October 2017 ARION Wrap-up

The volatility in the markets remains low, and so it continued during the month of October. However, luckily for Arion, here and there it seems that the markets are less available for the extreme complacency stance that we have been seeing in all of 2017. Odysseia Capital has been calling for this pick-up in volatility as it’s be hard to accommodate the view that the markets would now be unresponsive to every and any event, in what it would seem to the less attentive, a relentless march of asset appreciation. 

Despite what it seems now to be a healthy pick-up in global economy, it’s also true that the markets tick by what happens in the main economic blocks. We believe the next months, as Brexit negotiations will either default or succeed, as the USA administration will prove that it can deliver (or not) on promises and the ECB starts to tighten the monetary policy, will show a different picture in the volatility.

Specifically, this October, the October 26th ECB meeting brought extra localized volatility as Mário Draghi presented a more dovish approach as compared to several other previous public interventions. The effect on volatility (as represented by the VIX index) is clearly seen in the chart below, where it can be easily verified the volatility spike on the 26th of October, the date of the ECB monetary policy meeting and press conference.

Image source: CBOE (www.cboe.com)

The volatility spike on the 26th of October enabled some very interesting trades in the Arion and the strategy was able to end the month with a return of 2.4%, above the long term monthly target,  locking in the second month in a row of not only positive returns but also above the aimed 2%/month. It remains to be seen if the markets will allow Arion to return to stable stream of positive returns as seen before.

We take the opportunity to inform that the NZDUSD strategy will be removed from the portfolio. It failed to prove profitable after 1.5 years and the negative contribution of more -1% to the October return was the last drop. But worry not, a totally new NZD strategy has already been developed and it’s at this time under test.

June 2017 ARION Wrap-up – No news is not good news

June 2017 marks the second year in ARION’s lifetime. Unfortunately this is pretty much the only relevant piece of news this month. 

Following a string of several months, the VIX continues at historical low levels, limiting the rebound opportunities to move ARION aways from the plateauing period it has been experiencing since early this year.

June was basically a “no history month” with a +78 pip performance and a -10 USD profit in our showcase account at ForexTime. The account went nowhere, hurting our compounded monthly return which took another bite (at the end of June was sitting at 1.88% per month).

We want to avoid to repeat ourselves month after month, so now we wish to focus on a more interesting topic: Brokers!! (yes, it’s always so interesting to check that there are actually relevant differences between them)!

As we see months going by in 2017, we see our showcase account at ForexTime adding up negative months upon negative months. True, at most of the months the negative returns have been close to marginal, yes. However, it’s always distressing to see one’s account adding up negative performance upon negative performance. This is, however, not true for all brokers.

Upon a quick visit to our brokers webpage (https://odysseiacapital.com/resources/brokers/) it’s easy to see that from a pool of brokers running the exact same strategy, results over the months are hardly similar. To our despair, our showcase account at ForexTime (and it’s only so due to its longer history) is the account that has been, since September, the lackluster within the group.

From the pool tested, the best brokers to host ARION strategy have proved to be ActivTrades, GlobalPrime and Thinkforex UK, in this order. This is what our broker comparison tells us over a 9 month period. FXCM seems promising but we still need more data.

See the table below showing several brokers running the very same ARION strategy:

Table 1 –  Broker challenge running ARION over 9 months. The color scheme within each month show the relative performance of each broker when compared with the group in the same month.

Another important result is that when a broker is performing badly, over time, the negative (or positive, depends on which broker one hosts the service) results adds up. See the difference experienced between ForexTime account and ActiveTrades. Over 9 months it ads up to more than 11% return difference. It’s huge!!

Naturally that the performance of some of our customer’s accounts can be quite different from our ForexTime account, even if it is receiving signals from our ForexTime account through distribution channels like simpletrader.net, for instance. It depends at what prices orders are being filled, when signal triggers an order at customers’ accounts.

So, what does this means to our customers ?

While we are under talks with Forex Time to see what is possible to do on their side (we don’t have high expectations though), we are also advising a change to all our customers who might be experiencing something like our ForexTime performance, wish to stick with ARION and believe (as we do) that sooner than later a rebound in the strategy will come picking up again the long term trend of the strategy and the the long term targets defined for ARION.

We usually avoid any advising on what distribution channel we favor or disfavor. In this case however it seems clear some customers might have an advantage by subscribing the service directly through our webpage (as opposed to one of the signal copying services where our signal is also available) and to select ActivTrades (for instance) to host their client account.

Important to notice is that the ActivTrades account is a “Client Account” to our own service (even if owned by us) as any other account from a client would be. Therefore, in case your setup is a subscription through our website and an ActivTrades account to host your account and our signal copier, the expectation would be to track our client ActivTrades account closely. Please be aware however that other factors can also play a role, such as VPS hosting or latency from your computer and ActivTrades trading servers.

If you wish to move your subscription to a direct relationship through our site and our own signal copying service (instead of a marketplace such as simpletrader.net), and have any questions or doubts, please don’t hesitate to contact us. We will try to address all your concerns as soon as possible.

Please take notice that this post is no specific affiliate recommendation on any broker, as we don’t have any commercial relationship of affiliation or receive any rebates or revenues from brokers in any sense. The present post is solely a naked analysis of the facts and the identification of possible more advantageous scenarios to our customers.

Another month, another low overall volatility period in the markets.

Our outlook for a new high VIX sustained cycle we set out in our last March report did not materialize and throughout VIX maintained itself again in historically low levels. At the time of this post VIX stood at little over 10, already after a 2% daily increase.

Source: CBOE

Naturally we are not satisfied with this kind of numbness in the markets, which is causing ARION to underperform so far this year. For the first time in ARION’s history, May marked the first occurrence of a three month negative results series and a unwanted dip below our long term 2% monthly return target. The fact that it’s also the longest period of low volatility ARION has ever experienced doesn’t leave us anyway less disappointed with the way the last months have shown themselves to ARION. 

In benefit of the truth it must also be said that not all of our three sub-strategies in ARION had negative performance. In fact one of the three main strategies had a quite hefty monthly return. Arion benefits from a high degree of diversification, meaning that to enjoy less deep drawdowns one must be able accept that in some months good returns in some of the sub-strategies might be cancelled out by the other parts of the portfolio.

As one bad luck does never come alone (shouldn’t Murphy law work all the time), when around mid month we saw a spike in VIX, the strategy was able to scoop some really nice trades, but unfortunately the server where this FXTM showcase account was running had a severe problem and for some days this account was in fact intermittent on and off the market, missing the best period of the month. Our other account at Activtrades, which was running at a different server had in fact a positive month, mainly due to the nice trades the strategy was able to pocket exactly at the period when VIX spiked and managed to end the month positively. The positive May performance at our Activtrades account can be checked here: https://www.myfxbook.com/members/odysseiacapital/arion-activtrades/1899812

Overall, we can only say we’re regret this development of events and we continue to work hard to recover to our long profitability targets, especially now in this month of June when our strategy is celebrating 2 years in the market. However we really need some help from the kind of volatility we have seen in past years and months – VIX larger than 20 and volatility resulting from unambiguous events easily digested by the markets. 

French Election – We got the markets wrong

As usually, we made the internal assessment of the this weekend’s French elections. Following these latest weeks information paraphernalia we have concluded the most likely outcome would be that both Emmanuel Macron and Marine Le Pen would make the cut to get to the second round, as it came to happen. Contrary to some other voting recent events, we assessed that there wasn’t much room to any other outcome which didn’t include Emmanuel Macron in the final two runner-ups. This would be seen as market and Euro friendly.

We should be happy with the fact that we have consistently got the outcome of the latest binary events right. But we estimated wrongly the pricing the market had placed in other possible outcomes, namely the possibility that the second round would be decided between two anti-European protagonists. It’s clear now that, after the surprises of Brexit referendum and Trump election, the market is heavily pricing outcomes outside the consensus.

At the close of Friday’s session, our ARION strategy had two opened positions: A short EURCHF and a Long on XAUUSD (Gold). To put it simply, our assessment was:

a) if the result of the elections would come out to follow the consensus (Emmanuel Macron included in the final two runner-ups) no large movements would be seen as there would be no relief rally (outcome = consensus would mean business as usual and therefore no large market movements).

b) in the unlikely chance of an unexpected market unfriendly outcome, the market would, in our view, fly to safety assets such as Gold or to CHF, placing our trades in profit.

Clearly it was an error was to assume the market was mainly pricing consensus and not highly unlikely scenarios. The relief rally seen upon the election results, both with a strong appreciation of the EUR and a almost alike depreciation of Gold, showed us that after all market was strongly pricing a surprising outcome, which is in itself a strong paradox.

Whatever were the merits of our assessment, the important point was that we got the markets wrong this time and saw some negative trades with relevance due to the gaps verified at market open. As well as we point it out when we get it right, we do acknowledge when we get it wrong. We got it wrong this time and we are therefore sorry for the profits the strategy gave back due to this misread of the situation.

The positive point is that ARION is a highly diversified strategy and the impact was after all of limited dimension and not dramatically hard to be recovered. We took however our learnings from this event and know now that consensus now can mean surprise.

As always we are working hard to return to regular monthly profits soon.

We wish you a happy week ahead!

March 2017 ARION Wrap-up – Why this might be a good moment to initiate a subscription in Arion

The volatility in the markets stays in multi-month lows, a feature that in the latest months has been affecting our running strategy ARION.  ARION needs good volatile days to enjoy impactful trades. Impactful trades can have either a positive or negative outcome and ARION relies then on the statistical edge to pocket gains over a large number of impactful trades trades.

Let’s take the VIX as a proxy indicator of the general volatility in the Forex Market and take a look to the following chart:

Source: CBOE

Some relevant information can be extracted from the above chart:

1- The VIX has been hovering in the region of 10 to 12 what is commonly known as a super-low VIX. In the last year there hasn’t been such other long period of super-low VIX.

2- This super-low VIX period, corresponds to the following ARION monthly returns:

Jan: +3.6%  ; Feb: +0.6%  ;  Mar: – 2.0% 

Sure enough overall YTD (Year To Date) ARION has a  positive performance of shy above 2%, but that hardly brings us any big satisfaction as these figures don’t add up to our long term return objective, of at least a positive 2% average monthly return.

3- In the past year, the two moments when VIX reached it’s highest values on record, coincided with the moments when ARION too recorded it’s best months in the same one year period, both pip wise and in real money return. We must also point out that Odysseia Capital decided to stop trading prior to the BREXIT referendum, therefore in June ARION only traded approximately half of the month. This explains why the month of June 2016 was the “only” the 2nd best when in fact this was the month when the highest VIX figure was recorded.

4- It seems that the markets might be entering a new higher VIX period. This should bring no surprise in itself, as the geopolitical situation has been degrading on a daily pace, be it the hardships the USA president Donald J Trump has been experiencing in approving core pieces of his intended policies, be it the resulting change of the US focus from internal politics to the external international stage, with increased rhetoric in warfare issues.

The view of a coming increased VIX might have to do (or not – time will tell) with the recent note from Credit Suisse on its internal “Fear Barometer Index” and the fact that it’s currently seating at all time high levels (read the report here):

Source: Credit Suisse, Business Insider.

If geopolitical tensions don’t ease up (and they seem to be deepening, be it North Korea, US-Russia relations or Syrian and Afghanistan conflicts) , it seems the markets are in an optimal position for an higher VIX leg, which it could be a good setup for ARION.  

To whomever might be hanging on the fence to subscribe our ARION service, this might be the a good moment to do it and take advantage of a possible next upper leg in the VIX and ARION trade results. The service can be either subscribed here or at the market place simpletrader.net. Please don’t hesitate to contact us with all your questions before placing your order.

Odysseia Capital is about to making changes to the portfolio, aiming to be better positioned to this eventual market development. These will be announced soon.

 This week’s wrap-up:

Great comeback this week with 480 pips packed in our ARION account. This was enough to almost cancel the pending loss of this month. This coming week is calmer in terms of economic events, but let´s see that it brings to close the month.

To perform well ARION needs days with increased volatility, so generally it´s not good idea to switch off the signal by customer´s own discretion on foreseeably less than extreme events. This week it was clearly FED´s interest rate decision packed together with Janet Yellen’s press conference.

We are introducing some changes in the strategy that will be announced very, very soon. Stay tuned.

Coming to the end of the month…

Approaching the end of the month and facing the expectation of today’s Bank of Japan (BoJ) interest rate decision and monetary policy statement, we update a couple of topics:

• BoJ announcements have been both benign and malign for ARION in the past. For instance in September the lack of credibility of the BoJ governor’s speech and the JPY whipsaw price movements led to the 2nd worst drawdown period in ARION’s history. But there has been also many neutral and/or benign events to ARION around the BoJ announcement This is even more important when USDJPY is a core instrument traded by ARION. All things considered, we decided to keep business as usual and we hope BoJ will be, one more time, benign to ARION. If not, and if BoJ surprises against the opened positions or, worse, announces a non-credible monetary policy change, that makes JPY prices jump around, we know our journey is made of ups and downs, and we will have to be exposed to the downs to get the more interesting ups.

• The “worst” market day so far in 2017 took a toll in what was being so far a quite competent month. At this moment, the monthly return is still interesting and above our long term target but, of course, nobody likes to give pips away. The 3 independent strategies that contribute to diversify ARION, united all together this Monday and all took away precious pips from the accumulated stock, which is annoying being so end to the month, but that’s just how markets work. The 3 strategies work to diversify ARION ion but even so, there are times where all of them work in the same (negative) direction and even taking the same view in the same currency pairs, it’s normal.

THERESA MAY SPEAKS ABOUT BREXIT:

Tomorrow UK’s PM Theresa May will deliver a speech over BREXIT. The tension is high as seen in today’s session, by the large GBPUSD weekend gap of around 200 pip, with no other reason than the expectation of an hard brexit stance (meaning clarification of leaving the single market in order not to accept freedom of movement) in tomorrow´s May’s speech.

This high impact event is now already shown in most events calendars (MyFxbook, Forex Factory). Last week the calendars were not even showing the event. However, be alert about the exact timing of the speech. It has been changing in MyFxbook and it’s still tentative in FF.

ARION’s new all time Balance record

Whether you like the man or not, if you agree with him or not, that´s not the point.
The only important point to us is that, thanks to yesterday’s uniquely featured press conference, ARION was able to grasp correctly several market movements and establish a new all time record in the account balance.

THANK YOU VERY MUCH MR. PRESIDENT ELECT !

Disclaimer: this is not by any means a political featured message. At Odysseia Capital we try to balance professional approach to trading with a grain of humor. Truth is, we have no relevant political views, but surely acknowledge the potential impact political events may have in trading. Happy Thursday !

Christmas 2016 trading at ODYSSEIA CAPITAL

Christmas is fast approaching. At this time of the year volumes are usually low and with that or strategies are prone to show a more erratic behavior with increased probability. Therefore as of mid this week we’ll be reducing the exposure of the strategies to about half of our normal trading.

With that said we wish merry festivities and that 2017 might be a great year with lots of health, happiness and, of course, great returns !