Markets I Trade: February 19, 2019

I am going to develop this series to increase transparency and tracking of my trend portfolio. Currently I post approximately once every two weeks on a single trade. From now on I will be posting on my positions as much as once a week. I will also include all of my positions in each post. This means readers will be able to follow winners and losers as they change from week to week.

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In my non-registered account, I am developing my trend following strategy continuously. I don’t pretend to have all the answers. I am sharing this ongoing learning journey with you in this series.

I am always exploring new ways of trading, new markets to access, and better control of risk and opportunities. My main goal is to avoid large losses while achieving reasonable returns over time. I try to focus on trades which I believe have good reward-to-risk ratios.

You will see me trade index products, currencies, and commodities primarily with futures contracts and LEAPS options for maximum capital efficiency. I try risk small amounts of capital with each trade targeting high return multiples on that risk.

IWM: LEAPS Options

Source: StockCharts.com

I purchased IWM $160 call options on January 15, 2019 when IWM was trading at approximately $143 per unit. With the recent advance of U.S. Small Cap stocks, my stop has moved up nearly to my purchase price.

IWM has been on a strong run since the beginning of January. Based on the somewhat overbought readings, I expect the price may pull back somewhat in the coming weeks.

EEM: LEAPS Options

Source: StockCharts.com

I purchased EEM $45 call options on January 15, 2019 when EEM was trading at approximately $40.50 per unit. EEM has moved up in price since my purchase and my stop is set at $39.70.

EEM is currently going through a moderate pullback after just barely touching overbought conditions. If this upwards momentum continues, I would expect prices not to fall much further from here.

EWZ: LEAPS Options

Source: StockCharts.com

I purchased EWZ $50 call options on January 25, 2019 when EWZ was trading at approximately $44 per unit. I entered this trade a little later than I would have liked, but I believe Brazil has a good risk:reward ratio given the long downward slide in stocks and currency.

Brazil is currently going through a lot of changes that have a chance at reducing corruption and increasing investment flows. Since I purchased EWZ, the market has been pretty flat. I'm holding my stop level at a little under $40 at the moment.

GLD: LEAPS Options

Source: StockCharts.com

I purchased GLD $125 call options on November 19, 2018 when GLD was trading at approximately $115.65 per unit. GLD has moved up very nicely and is currently in profit with a stop set at $120 per unit.

Since my purchase, GLD has hit short-term overbought conditions on two occasions with following small pullbacks. Given the strong run up with persistent upwards momentum, my stops are almost steadily moving higher.

VXZB: Options

Source: StockCharts.com

I purchased VXZB $20 put options on January 16, 2019 when EWZ was trading at approximately $20.40 per unit. This is a volatility short trade that I made following the volatility spike we saw in December. So far the trade has nicely moved into profit.

VXZB is a unique instrument trading in mid-term contracts on the VIX Index. It recently took over from VXZ, the first version of this type of ETF—hence the limited trade volume before this past month.

Silver: Futures Contracts

Source: StockCharts.com

I purchased Silver futures contracts on December 20, 2018 at approximately $14.83 per ounce. Silver has moved up in price since my purchase. Silver has hit overbought levels twice since my purchase and we have seen pullbacks on both occasions.

I am ideally looking for silver to hold the January lows of $15.20 per ounce. If I see a strong move below that number, I will sell before the price falls below $15.10 per ounce.

Brazilian Real: Futures Contracts

Source: StockCharts.com

I purchased Brazilian real futures contracts on January 3, 2019 at approximately US$0.267 per real. The real has strengthened slightly against the dollar since my purchase. I have my stop set at US$0.253 per real.

This trade is effectively another play on the positive view I have on Brazil. For those interested in recent economic history and the massive change that can occur in currencies, back in 2008 and 2011 the Brazilian real was trading at approximately US$0.65.

South African Rand: Futures Contracts

Source: StockCharts.com

I purchased South African rand futures contracts on January 25, 2019 at approximately US$0.0731 per rand. The rand has weakened a bit against the dollar since my purchase. I have my stop set at US$0.0692 per rand.

Like the Brazilian real, the South African rand has more than halved in value in the past decade against the U.S. dollar.

I hope you enjoy this new format. Feel free to ask questions and leave comments.

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