How To Cut And Reverse Your Trade Introduction

In this blog post, we will look at how to cut and reverse your trade. Specifically, we will look at the Elite trader and his ability to reverse a loss from being down 100 lots to getting long up to 300 lots. This price ladder and order flow trading article looks at how an Elite trader on the Axia Futures desk executed trades during the ECB Press conference and after taking a sizable loss, was able to keep a cool head, reverse his position and turn things around.

This article is based on the video down below.

Elite Trader Execution

Price Ladder – Initial Entry Into Short

The trader entered the German 10-Year Bund and 5-Year Bobl after assuming that his hawkish trading plan scenario was in play. He shorted 150 lots in the Bund and a sizable position in the Bobl, but soon after entering, extra information was heard over the Squawk. What was the information?

Clues

• get short on the back of the hawkish comment
• new information from Squawk coming in: “although they tapered QE, they pushed out when rate rises will come in.”

Down below is the situation where the trader is currently in. Recording of this particular point in time can be found here.

Price Ladder – New Piece Of Information Hitting The Wires

Soon after the trader shorted both Bund and Bobl, extra information was heard over the squawk news service about rate rises being pushed further out into the future.

A buyer with over 3000 lots then appeared on the bid in the Bobl, holding the market up. The trader started scaling and averaging out of his position but continued going further offside in all of his trades. After being more than £20K down, the trader then noticed the Euro’s correlation supporting a dovish trade scenario and was quick to cut and reverse his position, being long bonds.

What you can see here, is the blip and hold to the upside. The moment market blipped and those 3800-ish lots appeared on the bid, the trader had two options.

• A) market will hit into the bid and continue moving down (primary scenario)
• B) market will hold that bid and continue moving higher which would signal a change in the expectation of the market (alternative scenario)

What is important here is the correlation with Euro. Since there is an inverse correlation between Euro and Bonds, this trader spots how Euro starts to move aggressively lower. This adds additional information to the puzzle. Now he is faced with these clues.

Clues

• new information coming from Squawk
• blip and hold
• over 3000 lots now holding the bid not being traded into
• Euro starts to offer aggressively

With all this information adding up, this creates the opportunity to cut and reverse the trade. Now being down 20k, it is all about being on the right side of the trade given the new information this trader has.

Price Ladder – The Cut And Reverse Trade

Now leaning on correlations, as long as the Euro is making new lows and that large bid in Bobl holds, he becomes comfortable increasing the size and going for that increase of the momentum, that final flush, constantly laying down the small offers to scale down his trade.

While the trader ultimately ended up bringing his day back well into the positive, it also goes to show that no matter how experienced you might be, there is always room to reflect, improve your execution and grow as a trading professional.

If you want to learn more about price ladder trade management techniques, join us at the free webinar we are running at: https://www.elitetraderworkshop.com.

Thanks for reading.

Don’t forget to check out articles you might also like:

• AXIA Elite Trader Executes a Smash & Grab Trade on ECB Minutes | Axia Futures
• AXIA Elite Trader Trades a Trump Tweet | Axia Futures
• AXIA Elite Trader Trades the ECB Press Conference | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Trade well.

JK

Elite Trader Trades False Break Setup With 200 Lots Introduction

In this blog post, we will review how Elite trader trades false break setup with 200 lots. If you are a frequent reader of our blog, you are familiar with the different styles of Axia Elite traders that range from news-driven aggressive trades to very technical ones. The style of this particular trader is very technical and over the years he has become a master of market profiles, a true Market Profile engineer. This trading setup is aligned well with the bigger picture structure and poor lows that should get resolved are the ideal location for the reversal of the trade and bullish continuation. If you like the style of this trader, you might also like the trade he took in the past in Eurostoxx where he executed 1000 lot trade.

This trade is based on the video down below.

Elite Trader Trade Setup

Bigger Picture Structure

Overall this setup is aligned well with the bigger market structure. The market has a bullish skew (long red arrow on the picture above), with higher lows being formed over many days. Over the course of the last 3 days, the market has created both poor highs and poor lows. Given the bigger picture structure being skewed bullish, this poor low location might be the ideal point for a reversal and continuation of trade to resolve the poor highs. These are the Elite trader clues in regards to the trade:

• the market is trading in a 3-day balance near the highs of the bigger picture structure
• the market has a bullish higher time frame setup suggesting support below this balance
• highs of balance are poor (no tails) suggesting weak sellers
• 4TPO ledge at 3332, and balance lows at 3330 are an ideal candidate for repair before we continue higher
• There is a poor low in Spoo that might help push other equities like Eurostoxx lower

Given the information about the overall bullish market structure, poor lows, and highs this is how an Elite trader formulated the trade idea:

• A higher timeframe structure makes it (a) hard for the market to be bearish and (b) makes a false break (FB) of lows at 3330 likely if the market tries
• 4TPO ledge at 3332 needs to be resolved
• Use break of 4TPO ledge as liquidity for entry to a long
• Have a high conviction that a break of 3330 will become a false break setup if the market won’t show seller’s strength (no tails at highs)

Let’s have a look at the actual detail of trade execution.

Trade Execution And Price Ladder

If you read through the observations of this trader, one thing is clear. If the poor lows 4TPO ledge will get repaired, it is all about HOW. As the market pushes to the trader’s entry price, he observes the sellers strength activity. He asks three important questions:

• What is the price response from buyers?
• What is the strength of sellers?
• Is there any absorption happening around the key access zone?

You can watch the direct recording from the price ladder here and notice how this trader sizes the trade with sizing up from 0 to 200lots.

As you can see down below, the market has dipped through the poor low, repaired the low, and in a nearly V-like fashion reversed the overall move but not immediately. You had to sit with the trade for a little while at the beginning phase of this trade. The absorption at the lows as visible on the footprint has become a key reference point. This trader did not want to see many more tests of this level given the overall bullish picture of the structure.

Now to wrap this up. One observation is that this Elite trader always anchors short-term info in the higher time frame info. Also, when the info aligns across all of the timeframes (including PA and correlations) you have probabilities in your favor and can lean on this in your conviction. If you want to learn how this Elite trader used our proprietary materials and grew to become an 8-figure trader, don’t forget to check the free webinar we are running at: https://www.elitetraderworkshop.com.

If you liked this type of content, you might check these videos as well:

• AXIA Junior Funded Trader Remains Composed After Missing Vaccine comment Live Trading
• AXIA Elite Trader trades Gilts & GBP On Bank of England Rate Decision
• AXIA Elite Trader Attacks 4 Markets On July 19 FOMC Rate Decision And Presser

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Thanks for reading and until next time, trade well.

JK

Deep dive analysis of the trading execution of AXIA Elite Trader Demetris Mavrommatis over the February 2022 European Central Bank Rate Decision

Trading over Central Bank policy decisions has been a key edge for the AXIA prop trading team and our traders are always prepared for any opportunity arising from a central bank policy shift. Following closely the communication and narrative from central bank speakers is hugely important, as any change in language has the potential to cause market repricing and therefore huge trading opportunities.

On 3rd February 2022, at its monetary policy meeting, the European Central Bank finally jumped on the hawkish bandwagon. After many months of resisting to change its guidance of ultra-low rates even as Eurozone inflation was running above 5%, President Lagarde finally acknowledged upside risks to the Inflation outlook and signalled openness to interest rate hikes in 2022.

AXIA traders, having observed the hawkish pivots from the FED and BOE at the end of last year, were eagerly awaiting such a policy shift from the ECB.

In this article, we will explore how an elite trader executed big short positions in the German and Italian Bonds as Lagarde started dropping the hawkish bombshells that sparked a broad Eurozone bond sell-off.

Watch the live trading execution

In this video, our co-founder and head of Strategy, Alex Haywood, is going through the trading execution of AXIA Elite trader Demetris Mavrommatis, over the ECB Rate Decision on 3 February 2022.

Market Context

Whilst most big central banks including the FED, ECB, and BOC have acknowledged upside risks to Inflation and prepared the markets for rate hikes, the ECB has distanced itself from other central banks by communicating that rise in Eurozone Inflation is only temporary and not a cause of concern.

Although the US and UK Yield curves have flattened aggressively since the FED and BOE turned hawkish in anticipation of rate hikes, the German Yield Curve has remained relatively steeper as ECB maintained its dovish guidance.

Scenario Analysis

There was not much expectation going into the meeting as the vast majority of analysts expected the ECB to reiterate its dovish guidance on rates and QE, and repeat that the recent inflation spike is only temporary and will eventually converge to the 2% target.

The fact that there was not much expectation for any change is what creates an asymmetric risk-reward for traders. In the scenario where the ECB did nothing and reiterated the last meeting’s commentary, then not much reaction is expected in the bond space. 

On the other hand, any change in the ECB’s Risk Assessment, whereby the ECB acknowledges upside risks to the Inflation outlook and signals its readiness to take action has the potential to create a powerful market reaction as this is not priced in by the markets. In such a scenario, we expect a broad Eurozone bond sell-off led by the short-end of the German curve as traders will start pricing in rate hikes. Peripheral bonds that have benefited the most from loose ECB policy will also get hit hard, as Core vs Peripheral spreads are expected to widen

Trading Execution over ECB Press Conference

As expected, the 12.45pm ECB Policy Statement did not contain any significant changes from the previous meeting so there was no trading opportunity there. Attention turns to the 1.30pm ECB Press Conference where Lagarde is expected to expand on the ECB’s deliberations and explain their assessment in detail. 

Lagarde starts her press conference by making upbeat comments on Inflation and the bond markets are on the move. At this point, she is just commenting on the Inflation readings from last month stressing how price rises have become more widespread, however, there is still no explicit comment on the Governing Council’s views on the medium-term inflation outlook. AXIA elite trader Demetris Mavrommatis starts positioning short in the Bund (German 10-year) and the Bobl (German 5-year) but with relatively small size at this point.

1. “Risks to Inflation outlook tilted to the upside“

Lagarde moves on to ECB’s Risk Assessment. This is a key paragraph in the ECB Statement where Lagarde comments on the risks to the economic outlook and Inflation outlook. Although the risks to the economic outlook are “broadly balanced” over the medium term, the risks to the inflation outlook are now “tilted to the upside”. Lagarde drops the first inflation bomb.

Compared with our expectations in December, risks to the inflation outlook are tilted to the upside

ECB President Christine Lagarde (3 February 2022)

This is the first time the ECB has explicitly stated that the risks to the inflation outlook are tilted to the upside and this commentary sends a hawkish signal to the markets. The ECB’s mandate is to achieve price stability by aiming for 2% inflation over the medium term. A view that risks are now to the upside means that the ECB will pay very close attention to inflation and potentially act to control it by raising rates. This is the first trigger point of execution. As soon as Lagarde says this, Demetris executes big short positions of over 1300 lots in Bund, Bobl and BTP. 

2. “Unanimous concern on Inflation numbers“

Although there was an initial spike lower in the bonds after the first hawkish comment from Lagarde, the markets quickly stalled and the focus is now on the upcoming Q&A. The key is to see how the ECB is prepared to respond to the upside inflation risks and whether they are ready to stop the QE and begin raising rates this year. Q&A will be critical in order to gauge ECB’s reaction function to the upside inflation risks. Lagarde starts answering the first question by saying:

I can tell you there was unanimous concern around the table of the governing council about inflation numbers

ECB President Christine Lagarde (3 February 2022)

This is the second trigger point that adds to Demetris’ conviction. Expressing concern shows that the ECB is growing uncomfortable with the high inflation readings, and it’s a signal of its willingness to act to control Inflation. This comment sparks another wave of sell-off in Eurozone bonds as Demetris Mavrommatis adds to his short positions. Short-end of the German curve (Schatz/Bobl) and peripheral bonds (BTP) underperform.

3. Leaving the door open for 2022 rate hikes

As the sell-off in the bonds accelerates, Lagarde is asked to comment on whether she is open to rate hikes in 2022. Unlike the previous meeting where she explicitly stated that a rate hike in 2022 is highly unlikely, this time she refuses to rule out a hike in 2022. This is the third trigger point in execution.

By declining to repeat that a rate increase in 2022 is unlikely, Lagarde officially opens the door to rate hikes. The short-end of the curve, led by the 2-year (Schatz) takes a very big hit as traders start to aggressively price in rate hikes this year. Bobl, Bund, and BTP follow while EUR/USD rallies.

Demetris rebuilds a big short position in the Bonds while buying the Euro. As the moves continue to accelerate as markets are digesting the unexpected ECB Hawkish pivot, he starts exiting his positions achieving a multiple 6-figure P&L

Key takeaways and summary

This article takes a deep-dive analysis of how our elite trader Demetris Mavrommatis executed big positions on the most recent ECB hawkish pivot. We go through the market context, and scenario analysis, but most importantly we closely analyse the key trigger points in Lagarde’s press conference where he executed his biggest size in order to achieve a multiple 6-figure P&L.

Such a policy shift from a major central bank does not happen often, and when it does, it presents a very unique trading opportunity for day traders. 

At AXIA, we train our traders to be prepared for these kinds of events and use clues from other central banks to identify asymmetric high risk-reward trading opportunities. At the end of last year, we were preparing our trainee traders on our 12-month coaching programme to be ready for this in 2022.

A deep understanding of yield curve dynamics is impeccable for traders to understand the relationship between bonds and global markets in an inflationary driven environment, and how to execute most efficiently in such types of events.

To see more examples of Demetris Mavrommatis’s execution on other big fundamental events such as geopolitical events and other central bank policy meetings, visit the AXIA Elite Trader playlist on our YouTube channel.

And for those who seek deeper understanding, we analyse many more of these elite execution videos in our internal training, both on our Career Programme and on our Blueprint Coaching Programme. To register your interest in free training and see more of these, visit www.globalmacrodaytrader.com

FREE Webinar Sign Up: https://www.globalmacrodaytrader.com

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis — Co-Founder, Head of Trading
Alex Haywood — Co-Founder Head of Strategy

How To Execute Like AXIA’s Elite Trader Introduction

In this post, we will discuss how to execute like AXIA’s Elite Trader. We will start with using the “adverse selection” analogy and then break down techniques that Elite Traders use, for maximizing their profits and minimizing the potential damage when a trade goes against them. In 4 simple steps, we will discuss how early aggressive action, can lead to asymmetrical gains and how small partial profit-taking keeps the Elite Traders always tuned to the market until trade exhaustion. If you enjoy similar articles about the way top traders manage their trades, don’t forget to check our previous article: “Elite Trader Price Ladder Scalping In Bund“.

Elite Trader Execution Techniques

Trading With Adverse Selection Principle On Mind

The fundamental element of aggressive trader behavior is the understanding of the Adverse Selection principle. At 20:49, Bogdan explains this principle very well. In a nutshell, the principle can be simplified like this:

• when you want it (want the trade), it is hard to get it or you can’t get it
• when you don’t want it or get the trade too easily, you probably do not want it

Yes, there are caveats to this principle, it can’t be taken too literally and applied to everything in life, but the core principle stands. Why? Pause for a second and ask yourself: When was the last time you wanted to get a fill on a trade but did not get it? How did those types of trades work out eventually? And what about all those trades you got filled easily, how did those trades play out?

So how can this principle improve your trading? It can help you with being more aggressive when there is an opportunity that you really want it. Let’s have a look at what I mean by that.

4 Trading Techniques Elite Trader Uses

In the live trading session video above, Axia Trader Adam looked at 2 examples of how he has incorporated execution techniques into his own trading that he learned from Axia’s Elite trader. This recording specifically focuses on the second phase of a trade when it has started to work and needs to be managed with scaling techniques.

The four main techniques from Axia’s Elite trader have been:

1. In with size quickly, out with small clips laid on bid/offer
2. Never hold full-size offside
3. Aim to stay with a trade until exhaustion
4. Front run denial if signs of exhaustion/news is ‘TGTBT’ (too good to be true)

Now let’s break down each technique in greater detail using the price ladder with the example of trade management.

To reference trading techniques 1 to 4, we will use the image above. Starting with technique number one, using the adverse selection principle, you must be aggressive and get in as early as possible with your maximum size. This means lifting the offer or hitting the bid, not passively sitting to get hit. Then it is all about laying down small clips on the bid or offer depending on trade direciton. This ensures you can maintain your core position still in play while taking profits as the market moves in your favor.

Being early gives you more room. Trading technique number two is to never hold full-size when offside. On the image above, you can see that after 100lots have been placed in the market (yellow box), 50lots sit just above (purple box) to exit the market in case the market moves quickly against you.

The idea of technique number three is to stay in the trade until exhaustion. Since you laid down small clips, you can maintain your core position for the final exit when the price ladder personality shifts. If you want to find out, how to recognize price ladder personality shift and exit trade ahead of the crowd for the best possible price, join us at the free webinar we are running at: https://www.elitetraderworkshop.com.

The final, fourth technique requires a full set of additional steps and we will devote a separate article to it. Just be aware, that there is also a market opportunity to be exploited in this technique.

As we have finalized the four trading techniques Elite Traders use, let’s have a look at some trading examples.

Trading Examples

In trading examples below, we will look at the Brexit amendment vote on January 29th, 2019, and a US/Chine comment.

In this first example, which starts at 7:56, Adam trades the Brexit comment. The key takeaway from trading the GBP move was that Adam has laid down the bids too quickly and too narrow therefore the majority of his position was out of the market before the final exhaustion has happened. This prevented him from using technique number 3.

In the second example, which starts at 16:55, Adam trades the US/China comment. If you observe his trading execution on a price ladder, his techniques for managing the trade were very similar to what we have described. The key takeaway for Adam from this trade was his speed. The comment did not offer much-anticipated follow-through, but if early, a good 15tick move could be taken from the market on a decent size.

Key Trading Takeaway

Speed, aggression, max. size and small clip scaling until exhaustion. That is in a nutshell what we want you to take away from this article and incorporate into your own trading.

Thanks for reading.

Don’t forget to check out articles you might also like:

• AXIA Elite Trader Executes a Smash & Grab Trade on ECB Minutes | Axia Futures
• AXIA Elite Trader Trades a Trump Tweet | Axia Futures
• AXIA Elite Trader Trades the ECB Press Conference | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Trade well.

JK

How do you react when you take a big loser on a high-conviction trade? How do you manage a position that goes instantly offside even when you believe it’s the right trade? But most importantly, how do you reset your mind and bounce back from the big loss so as to attack the next opportunity with even more size and aggression?

In this article, we will first explore how a trader manages a losing trade on the FOMC Rate announcement, but most importantly we will then see how he executes aggressively on a second high-conviction trade 30 minutes later in Powell’s FOMC Press conference.

The key here is to observe and understand the big difference in trading execution between the two trades. In contrast to the first trade, where he was focusing on cutting his size quickly as the market moved against him, in the second trade he attacked much more aggressively with 5X the size of the first trade. This was because he received a positive price response immediately as he executed, whilst observing strong high-volume flows across correlated markets which were all reacting to the comments. Once the big position was built, he then focused on running the trade until the markets took big technical levels.

Watch the live trading execution

In the Youtube video below, Alex is going through the trading execution of AXIA Elite trader Demetris Mavrommatis, over the FOMC Rate Decision on 22 September 2021.

The FOMC event didn’t start well for Demetris as the trades he executed on the FED statement did not work. Although the Fed Dots (SEPs) were clearly hawkish indicating faster rate hikes, the market reaction was not what one would expect. After a brief blip down in US bonds/gold and equities on the hawkish statement, the markets retraced and rallied. Demetris was forced to exit his short positions for a loser.

Nevertheless, 30 minutes later he executed very aggressively on the hawkish Powell remarks in the press conference regarding the timing/conclusion of tapering. As Powell announced that tapering of bond purchases might conclude by the middle of next year (i.e. faster than the market expectation), he built short positions in the US 5-year bonds, Gold and S&P. As the markets were caught off-guard by Powell’s remarks, they sold off to retrace the initial rally that happened on the FOMC statement. Demetris managed to hold the majority of his size in the US 5-year and Gold until the markets traded through the lows of the day and took key technical levels to the downside.

Deep Dive Analysis of the Trade

Market Expectations

The focus was on the FED’s dot plot. The median dots (SEPs) were at 0.125% indicating no hikes for 2022. Analysts were divided as to whether the FOMC members would move their dots up to indicate a hike for next year. Most believed that the very disappointing payrolls report would make most members stand pat on rates, while some others saw the median dot moving up to 0.375% (i.e. showing one rate hike by the end of next year). Furthermore, analysts expected changes to the FED statement that would set the stage for a taper announcement at the November or December meeting.

Scenario Analysis

Demetris was planning to execute in the 5-year Treasuries, the Gold, and potentially the S&P. His dovish scenario was if 2022 and 2023 dots were unchanged. In that case, he was planning to go long in all three markets. Conversely, the hawkish scenario would be if 2022 dots showed lift-off, 2023 dots moved higher and the statement was indicating bond tapering to start in November. In this scenario, he would be selling all three markets.

Trading execution over the FOMC Statement

The FOMC statement hits the wires at 7 pm UK time. Key headlines indicate that FED members now see lift-off in rates in 2022. Even more significantly, FED members now see the Fed Funds rate at 1.0% in 2023 vs 0.6% previously, signaling a steeper path of rate increases.

Demetris reacts by selling the US 5-year bond, however, he goes off-side instantly. He also sells Gold and S&P, but none of these markets seem to play ball with the hawkish headlines. Price confirmation is clearly not there, so he quickly reduces his exposure across the three markets. Nevertheless, as markets continue to rally, he takes a loser as he exits his positions.

Trading execution over Powell’s Hawkish Comments

At 7.30 pm UK time, Powell begins his FOMC press conference where he is expected to offer further insight regarding the FED decision. Note that in the FOMC Statement there was no mention regarding the “pace of tapering” (i.e. how many billions of Treasuries per month to taper). Moreover, in the statement, there was no mention of when tapering is expected to conclude. Most analysts expected tapering to conclude towards the end of 2022.

Soon after his initial remarks, Powell states that “so long as the recovery remains on track, a gradual tapering process that concludes around the middle of next year is likely to be appropriate”. He also states that “the language in the statement meant to flag that the bar for taper could be met as soon as the next meeting”.

These two hawkish quotes from the Fed chair are very significant, and something the market was not prepared for. He indicates that tapering will start and conclude sooner than what the analysts expected.

Demetris reacts by selling 600 lots (3 clips of 200 lots) in the US 5-year. A couple of seconds later and as soon as that trade goes onside, he instantly shifts his mouse to the S&P and sells 240 lots (3 clips of 80 lots). He also sells 80 lots in Gold and 50 lots in US 30-year bonds.

The key here is to note how quickly he built these big positions by observing the price action and the flows across markets that were strongly confirming his trade idea. He received a good positive price response seconds after his execution in the 5-year bonds, so immediately he shifted his focus on another market that he wanted to execute. In contrast to before where he entered a “defensive mode” of cutting the trade quickly as the market was moving against him, this time he did the opposite and built large positions across several markets in a matter of seconds.

Once the positions were built, then it was all about size management in order to maximise the potential reward of the trade. After the initial blip down on Powell’s remarks, the markets started trading sideways for a few minutes. Demetris was convinced that there was potential for a full retracement of the up-move on the FOMC Statement release. He felt that Powell was unusually hawkish and that the positioning of the up-move had to unwind and the markets fully retrace the original moves up.

As the moves accelerated through the “scene of the crime” (starting price), Demetris added to his positions and was now targeting the lows of the day in the Gold and furthermore some big technical levels to the downside in the US 5-year. Once those targets were reached he significantly cut his size and locked his profits.

Key takeaways

By analysing Demetris’ FOMC execution we can see firstly how a top trader reacts and manages a losing trade, but most importantly how he then shifts gears and maximises his profits on another opportunity that comes later in the session.

High conviction trades don’t always work the way a trader expects. Even with the best preparation and solid plan, things can go completely wrong. Instead of asking why while being blinded by our bias, we should focus on how to manage the trade. The clues on whether to add to the positions or cut them are in the price action and order flow. Deep observation of correlated markets as soon as the event hits is also critical so as to confirm our ideas and execution strategy.

At AXIA, these Elite trader execution videos are invaluable content for our junior and developing traders. We analyse many of these in our internal training, both on our Career Programme and on our Blueprint Coaching Programme. To register your interest in free training and see more of these, visit www.globalmacrodaytrader.com

Finally, to see more examples of our elite trader execution on other big fundamental events, such as geopolitical events and central bank policy meetings, visit the AXIA Elite Trader playlist on our YouTube channel.

FREE Webinar Sign Up: https://www.globalmacrodaytrader.com

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis — Co-Founder, Head of Trading
Alex Haywood — Co-Founder Head of Strategy

Elite Traders Trading Execution Playlist Introduction

In this blog post, we will revisit the Axia Futures YouTube video archive and watch the Elite Trader’s price ladder execution playlist. We will specifically focus on the execution of the Elite Traders using the price ladder by providing you with the specific time, where the price ladder execution begins. Each video will be accompanied by a theme and a learning question dedicated to improving your trade management skills so you can make the most out of the order flow mastery of these traders. On the importance of high-quality questions, we have also written an article (Trading Techniques To Become More Profitable Trader) you might find helpful.

Let’s get started.

Axia Futures Elite Traders Playlist

In case you have not been aware, there is a whole list of high-quality content of Elite Traders videos that we have shared with the trading community.

Click on the image above or this link to find the full list.

Axia Futures Elite Traders Price Ladder Execution

Elite Trader Trades Trump Address To The Nation After Iran Attack

Price Ladder execution starts: 20:48

Theme: With the beginning of 2020 there was a dramatic escalation in tensions between the US and Iran after Trump ordered an airstrike on Jan 3rd that killed top Iranian military commander Soleimani. After this, Iran pledged to take “severe revenge” and markets started getting nervous about the prospect of a military conflict between the two nations. Oil and Gold surged on geopolitical risks after the US strike while equities and risk-assets sold off. The markets were nervously awaiting Iran’s response although there was hope for a diplomatic solution and an avoidance of Iran’s retaliation.

Question: How would you describe the trader’s scaling strategy when the market was not moving in favor of this trader?

Elite Trader Pushing Performance Boundaries on US-China Trade Commentary

Price Ladder execution starts: 21:38

Theme: On Monday morning, while attending the G7 summit, Trump commented that China called the US and is willing to restart negotiations with the aim of achieving a trade deal. This was a surprisingly positive development that should cause risk assets to rally and safe-haven assets to sell off.

As soon as those headlines hit the wires, our Elite Trader positioned himself aggressively in S&P, Gold, Yen, and Bund. Knowing how those markets were caught off guard by these comments, he expected an aggressive unwinding of the overnight moves as traders would rush to square their positions.

Question: Given the risk-on environment, what was the order/priority of the products this Elite Trader hit in order to achieve maximum return? And why?

Elite Trader Trades Gilts & GBP On Bank of England Rate Decision

Price Ladder execution start: 15:04

Theme: As the BOE Rate Decision was released at midday UK time, the BOE said that it will “engage with regulators on how to implement negative rates”. This statement was taken by the market as a signal that the BOE is moving closer to cutting rates below zero for the first time in its history.

Although initially, markets were a bit slow to react, as the comment got wider attention, Short Sterling (UK short-end bonds) futures started catching a bid, indicating market participants started bringing forward their expectations for negative rates. Gilts (long-end bonds) followed STIRS higher while GBP started selling off.

As the comments drop, our trader starts executing by feeding a few clips in the Gilts, while also selling the Cable (GBP). As the volume in these markets picks up and as the velocity and order flow dynamics shift and become more aggressive, he adds to his positions. He buys over 300 Gilts, sells 180 Cable, and buys 360 lots in the Short Sterling. Although after a first move up in Gilts the market stalls for some time, he decides to stick with his trades and hold the majority of his size for a second leg-up. By holding on to his positions he manages to double his P&L for the day.

Question: There was a moment when the Gilt market started to stall and possibly put the trader’s position in danger. The trader held that position thanks to the correlation with another market. What was the correlated market that gave him the conviction to hold?

Thanks for reading.

Don’t forget to check out articles you might also like:

• AXIA Elite Trader Executes a Smash & Grab Trade on ECB Minutes | Axia Futures

• AXIA Elite Trader Trades a Trump Tweet | Axia Futures

• AXIA Elite Trader Trades the ECB Press Conference | Axia Futures

If you like our content and would like to improve your game, definitely check one of our courses that teach you all the techniques presented by AXIA traders from a market profile, footprint, or order-flow. If you are someone who likes to trade the news, we have a great central bank course. And if you are really serious about your future trading career, consider taking AXIA’s 6-Week Intensive High-Performance Trading Course.

Trade well.

JK

At the European Central Bank meeting on 11 March 2021, the ECB decided to increase the pace of its weekly bond purchases in order to counter an unwarranted rise in European long-term yields that was sparked by US inflationary pressures.

As this decision came as a surprise to the analysts’ expectations, one could have expected a “straightforward” rally in European government bond markets on the back of the announcement.

Instead, the initial market reaction was very choppy which resulted in many traders on our floor losing their conviction and giving up on their long positions as the market didn’t react the way they expected.

In this article, we explore how our elite trader Demetris executed the announcement. We will see how he actively managed his positions in the initial choppy phase of the trade which allowed him to stay in the trade and run his long position for a big winner.

Watch The Live Trading Recording:

Market Context

After some verbal intervention from ECB officials where they expressed their concern about the recent rise in Eurozone yields, the market was waiting to see how the ECB would actually react and whether it would take action to counter the rise in yields.

Analysts were divided as to whether the ECB would just stick to verbal intervention or whether they would go a step further and actually communicate an increase in the pace of monthly bond-buying under the PEPP (Pandemic Emergency Purchase Programme).

Scenario Analysis

In the Hawkish-Dovish spectrum, we have three distinct scenarios that Demetris was focusing on executing. A statement that was identical to last time would be considered as hawkish (as ECB wouldn’t be addressing the rise in yields) whereas an increase in the pace of bond purchases would be considered as the most dovish. The Bund (German 10-year bond) and Buxl (German 30-year bond) were the main markets the elite trader was planning to execute in.

12.45 ECB Rate Decision

At 12.45 pm London time, the ECB released its Rate Decision and accompanying Statement. Scanning through, we can see that two significant lines were added in. The first one said that the ECB will be purchasing bonds flexibly with a view to preventing tightening of financing conditions, and most importantly a second line indicating that purchases under PEPP to be conducted at a significantly higher pace. As specified above this was one of the most dovish scenarios.

Execution of the Dovish play

As soon as Demetris spotted the changes in the ECB statement he immediately started buying the Bund. Although in theory, the move-up should have been clean and fast as the statement deviated from analysts’ expectations, the initial reaction was surprisingly very choppy.

A quick 16-tick move in the Bund (from 171.54 to 171.70) was followed by a full retracement in the next few seconds. And this was followed by a few minutes of aggressive sideways price action with the bund oscillating in a range multiple times. This kind of price action is not what a day trader wants to see when he buys big size on a high conviction trade. He would expect to go onside straight away and then focus on running his winner. But on many occasions, the market will not react as people expect, and this makes traders lose their conviction and give up on the trade early on.

In the video above, we can see how our elite trader managed his trade in this initial phase of the event with the aim to maximise reward if the trade went his way, whilst keeping his risk in check if the trade never worked. This constant refinement of his position eventually allowed him to run big size (max 580 Bund and 80 Buxl) in the second more “grindy” phase of the trade, until the long position reached his technical target. Once the big daily technical level in the Bund was taken out, he significantly reduced his exposure and locked a P&L of over $220,000.

Key takeaways

On high-risk events like the ECB or the FOMC Rate decisions, the first few minutes after the statements drop, markets are dominated by huge volatility and often wild swings as market participants try to analyse the statement and execute positions within seconds.

Sometimes the markets might start trending instantly on the back of an unexpected announcement, however, on many occasions, the market can move up and down violently for minutes before it settles into a trend.

What is hugely important here is that a trader does not give up on his conviction in the initial choppy phase of the trade. With active management of the position in the first minutes, one can allow himself to run the trade once the market escapes the sideways range and starts trending.

To see more examples of our elite trader execution on other big fundamental events, such as geopolitical events and central bank policy meetings, visit the AXIA Elite Trader playlist on our YouTube channel.

FREE Webinar Sign Up: https://www.elitetraderworkshop.com/

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy

In the morning of Monday 9th November 2020, the world welcomed a huge milestone in the war against the pandemic as Pfizer announced that its experimental Covid vaccine was found to be 90% effective in preventing Covid infections.

This announcement on the vaccine’s efficacy surpassed even the most optimistic expectations and as a result it sparked huge Risk-On across the financial markets, with global stock markets rocketing while safe-haven government bonds and Gold tumbled. 

This event created big opportunities for global macro day traders who were able to execute trades as soon as the announcement got released.

In this article we will explore how our top AXIA macro trader reacted to this event, as we go through his trading execution step-by-step and see what was going through his head as he was trading the extreme volatility sparked by the event.

We will see how he truly maximised the opportunity presented, by aggressively executing large positions across five futures markets to achieve a 7-figure P&L in the space of a few minutes after the announcement hit the wires.

Watch The Live Trading Recording:

Background: The significance of a highly effective vaccine

The fight against the pandemic and the recovery of the global economy rests on vaccination of the world’s population. Only then we will go back to normal and the world’s economies will emerge from a pandemic-induced recession.

After successful and promising Phase 2 studies from the frontrunner vaccine manufacturers, the whole world and the financial markets were focusing on Phase 3 study results. These studies involve around 40,000 people and are the final hurdle before the health authorities approve and start manufacturing the vaccine. 

For a couple of months now the markets were eagerly waiting for results from the companies that were near completion of the Phase 3 study and these are: Pfizer+Biontech, Moderna and Astrazeneca.

The preliminary results of these studies would show us 1) if the vaccine has been effective and 2) what was the Efficacy rate in the study (i.e. what percentage of people who took the vaccine actually achieved immunity)

Market Impact on different sectors of the economy

For traders and investors around the world, these results would have huge implications in the financial markets. The FDA had stated that a vaccine with around 50-60% efficacy rate would be good enough for approval so this was more or less the minimum threshold. 

But at the same time if this efficacy rate was a lot higher then it means that we would get out of the pandemic much faster than expected. The baseline expectation based on Phase 2 studies was that the vaccine should be at least 60% effective, the higher the better.

The vaccine results would have a different impact on different sectors of the economy. Since the beginning of the crisis we have seen the cyclical and value stocks (like the big industrial names) get battered while some of the huge tech companies like Amazon, Netflix and other stay-at-home stocks managed to weather the storm and outperform significantly, as their revenues exploded. 

So we have effectively seen a big rotation from value stocks to tech stocks. This massive rotation is best reflected when we compare the Nasdaq 100 index over the last 9 months vs the Russel 2000 or the Dow 30 index. Looking at the chart above we can see how Nasdaq has massively outperformed the Dow since the March lows. The Nasdaq took out its previous all-time-high on 5th of June and kept rallying since, whereas the Dow only took its previous ATH in the futures on the Pfizer Covid Vaccine announcement day (9th November).

Trading Scenario Analysis

In terms of trading execution, it is quite obvious that a highly effective vaccine (high efficacy rate) should spark big risk-on. On the flipside, if for any reason the Vaccine does not meet its primary endpoint and its not proven effective enough, expect HUGE risk off across the board in the markets.

Having said that, it’s also key to select the markets that offer the best risk-reward potential when the announcement hits. Going back to previous reactions to positive Phase 2 study results as well as other therapeutics announcements, we could see that the biggest impact is on the Equities (and more specifically on the big industrial names and value stocks). So in this case we expect markets like the Dow, DAX, Russel, Spoo to react big to the upside while the Nasdaq undeperforms. 

Nonetheless, if the announcement causes huge risk-on, you would also expect government bonds/gold to sell off as investors would pair their stimulus and easing bets going forward.

Pfizer announcement hits the wires

At exactly 11.45am on the day, Pfizer releases a statement saying that its Covid vaccine is found to be over 90% effective in its large Phase 3 study. This was a bombshell statement which beat even the most optimistic expectations and an enormous milestone in the fight against the pandemic.

The 90% efficacy finding for the vaccine produced by Pfizer far outstripped expectations of a 60-70% reading among analysts and compared to around a 40-60% efficacy rate for seasonal flu vaccines. 

Such a high efficacy rate meant that the global economy could recover faster than previously expected and this was a very big positive development. As one would expect, huge risk-on was sparked by this announcement, and within the first few seconds, global equity markets skyrocketed.

Elite trader reaction to the news – Building the big positions

As we have seen with past streams, our Elite trader is renowned for trading these types of events, executing with maximum conviction and aggression, hitting the markets as hard and as fast as possible. 

As soon as the results of the study were released, he bought 400 E-mini S&P and 90 DAX. Within the next few seconds his PnL was printing over $300,000.

In his head, this was a massive event and a huge opportunity to possibly achieve his best day ever, so at this stage all he is thinking is how to add to his positions and take even more risk. As he explained, in situations of extreme volatility like this event, he manages to stay focused by visualising the huge reward if the trade works out as he expects.

He knows how significant this news is and he won’t rest until he exposes himself to the maximum risk he is willing to take. So as the equity futures keep exploding higher, he also goes and buys 150 lots in the E-mini Dow. He feels the Dow offers great risk-reward as he is convinced the value and big industrial stocks will massively outperform on this announcement.

15 seconds after the announcement, and as the price action across markets confirms his thoughts and conviction, he feels he would like to take even more risk, so while he is around 650 lots long across three equity indexes, he goes and sells 540 bunds.

At this point, I felt I got as many limits as I wanted on the equities but I quickly glanced at the bonds and realised that they hadn’t moved much.

I thought this news was a game changer for all asset classes across the board, and I felt that there was potential for the Bund to get sold big on this, given how tight and contained it had been in the last few sessions. 

AXIA Elite Trader

As he explained, he felt that there was big potential for both Bunds and Treasuries to eventually tumble on the huge risk-on sentiment, and on the assumption that central banks might end up scaling back their huge monetary stimulus faster than expected, as the highly effective vaccine would normalise the economy faster than previously forecasted.

Managing the trades – Scaling out & locking profits

After building those big positions across markets, then it was all about managing the trades as efficiently as possible in order to maximise the P&L. As per his usual execution strategy that we saw on previous streams, he is jumping from one ladder to another, scaling out the positions and locking profits. 

Keeping a close eye on correlations and order flow of his main ladders he could get a feel for the overall sentiment and identify which markets were overreacting and which were lagging behind. He uses this information to keep adjusting his positions.

In just over 2 minutes after the announcement his P&L broke the 7-figure barrier and that’s when the equities started pulling back from the extremes. At this point he decided to start cutting his exposure on the equities while holding the majority of his bond positions. 

I realised that the Spoo had done over 50 handles in around 2 mins. Dax did over 250 ticks! 

My thought process at this stage is: This is a very big move in a very short timeframe, and even if we go further eventually, there’s a strong chance that we pull back significantly before the second leg.

So if I see the equities start stalling or pulling back at this stage, then I am ready to cut my risk significantly.

AXIA Elite Trader

His rationale here is that the bonds hadn’t really moved far enough in relative terms and as compared to the huge equity moves. He felt there could be a big delayed reaction in the bonds and he was willing to stick with the trade and not scale out, as he was confident that powerful bearish flows would eventually start hitting the bond space.

It soon turned out that the pullback in risk was short-lived, and equities started making new highs. Although he was a bit upset at this stage that he had covered most of his equity positions, he felt that at the time, being short the bonds offered a better risk-reward opportunity. Over the next ten minutes, the bonds rolled over as he expected and he managed to add significantly to his PnL.

At the same time, he started feeling that the equities had over-extended to the upside at this point. As the NASDAQ started leading the way down as big tech and stay-at-home stocks started getting hit, he took a few short positions in S&P, Euro Stoxx and Nasdaq, and as those positions paid off, he managed to achieve his best day ever, netting over $1,300,000.

Key takeaways from the Elite trader execution

The YouTube video embedded in this article offers invaluable insight into the execution methodology of AXIA’s largest trader, by analysing in great detail his strategy and thought process as he is trading multiple markets simultaneously in extremely volatile conditions.

Our elite trade has cultivated his edge and skill-set in trading global macro events with such confidence and conviction over a career spanning 10+ years. This enables him to put the big size on whenever he feels there is a big risk-reward opportunity to be taken.

As he explains, he always visualises these mega days, i.e. he is using his mind to see his execution over a potential big trade on a certain event, and this makes him super prepared and focused for when the event does happen.

As we have seen he will not hesitate to hit as hard as possible and as fast as possible, and once he is happy with the size he exposed himself to, he will focus on managing the trade actively using his peripheral vision of observing all correlated markets. This enables him to feel the overall sentiment so that he can tweak his execution and adjust his positions accordingly.

To see more examples of his trading execution on other big fundamental events, such as geopolitical events and central bank policy meetings, visit the AXIA Elite Trader playlist on our YouTube channel.

FREE Webinar Sign Up: https://www.elitetraderworkshop.com/

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy

In the world of proprietary trading, when it comes to trading macro news or central bank rate decisions, sometimes the news can be huge outliers and deviate massively from market expectations in which case the market participants get taken by surprise. Examples of these are an unexpected FED rate cut, a huge unexpected beat/miss in the Non-Farm Payrolls, or as we saw recently an announcement of a massively effective Covid vaccine that beats even the most optimistic expectations.

Instances like these create very high probability trades and a trader can execute with very high conviction, being confident that the market will move aggressively to price in the new “unexpected” information.

However, on other occasions, a trader is faced with news that are not such big outliers and instead are open to interpretation, as they contain clues that are more subtle and nuanced. The market will probably not move immediately and aggressively on such news and there will rather be a two-way flow. In such situations, a top macro news trader will rely on full artillery of skill-sets, from deep understanding of the macro environment and what is driving market pricing, to his ability to deeply understand order-flow dynamics of individual markets and price action shifts. Moreover, he will rely on his skills of reading correlations between markets so that he can lean on the most-sensitive-to-the-news market to execute positions in other markets.

In this article, we will explore all the above, as our top macro trader has executed across 3 markets on the September 2020 Bank of England Rate Decision, and more specifically on comments regarding the potential adoption of negative rates.

Watch The Live Trading Recording:

Background: Recent Bank of England speeches

In the fight against the Pandemic, we have seen central banks around the world taking unprecedented measures to provide monetary support and stimulate their economies. Interest rate cuts and the launch of massive bond-buying programs (Quantitative Easing) have been the main monetary policy tools that have been used by central banks in this crisis in order to provide financial support.

Although the Federal Reserve has cut rates to 0%, FOMC officials decided NOT to go negative, whereas the ECB and the BOJ have been implementing negative policy rates for a while now.

Bank of England’s policy rate is currently at 0.1%. In most recent times, the BOE has been in a dilemma with regards to the use of negative rates. Although some members have expressed their potential support for them, the majority of the MPC (Monetary Policy Committee) officials, including the BOE governor Bailey, have been communicating that although they are in BOE’s policy toolbox, this is not the right time to be implementing them.

As per recent BOE commentary, market participants had pushed back their expectations for negative rates. Pricing of future rates can be derived by looking at the Short-Sterling futures (UK short-term interest rates)

12pm Bank of England Rate Decision (Screendump)

At midday UK time on 17 September 2020, the BOE released their latest Rate Decision. This was accompanied with BOE minutes, which show additional commentary on the deliberations of the MPC.

Not much was expected from BOE at this meeting and market participants viewed this meeting as a “non-event”. It was expected that rates and QE were going to be left unchanged and that commentary would be very similar to the previous meeting, as further action would be contingent on the evolution of the pandemic and potential Brexit developments.

The headlines from the Rate decision were hitting the wires in a piecemeal fashion (i.e one after the other) due recent changes in the release, unlike previous times where all headlines would hit at exactly 12.00pm.

At around 12.03pm there were some comments on negative rates. More specifically the BOE said that the committee had “discussed the effectiveness of negative rates in particular” and also that the BOE was “briefed on how a negative bank rate could be implemented effectively, should the outlook for inflation and output warrant it”. A few minutes later it was also reported that the “BOE will engage with regulators on how to implement negative rates”.

Elite trader reaction to the news

Unlike other instances where we have seen our Elite trader smash big clips and enter the market aggressively with big size, in this case he started scaling in with smaller clips (10 lots) in the Gilts, and only when he saw the volume picking up and the order flow and price action changing significantly he attacked with bigger clips.

As he explained, the reason for this different reaction, was because he felt that comment itself was not a huge surprise, as the BOE had already mentioned before that they had been discussing negative rates. It was a comment that was open to interpretation, and he started trying to gauge from the price action how the market would take it. 

The fact that they have been discussing them and they have been talking to regulators on how to implement them, on one hand could be interpreted as a technicality and that they just want to make sure that the processes are there in case the negative rates are ever needed. On the other hand, the market participants might interpret this statement as a signal, that the fact they have been briefed by regulators means that they are really close in implementing them. For more clarity, he kept looking at his newswires to see if additional headlines could paint a clearer picture on BOE’s intentions. 

As these headlines are being picked up by other wires and start getting retweeted and rehashed, the market starts processing these as a potential signal that the BOE is getting ready and closer to implement them. The change in order flow dynamics and velocity of the market, and the volume spike across the three correlated markets he is looking at (GBP, Gilts and Short-Sterling), gives our trader confidence to attack more aggressively and build bigger positions in these markets.

He lifts over 300 Gilts while selling around 180 Cable (GBP). Although he doesn’t really trade short-end products like the Short-Sterling, and he would rather prefer to use them as a barometer to help him with execute in the Gilt and the Cable (GBP), in this case he does lift a couple of clips in the Short-Sterling, purely because the comment is specifically related to rates, which means Short Sterling should be the most sensitive market and the one that reacts the most in relative terms.

Trading the second leg of the move

As the markets react further to the news, he starts printing a decent PnL. Now we are 5 minutes in after the rates headlines hit and at this stage most of the other traders on the floor have reduced significantly their positions and most have even covered their positions completely as they managed to capitalise on this first leg of the move. 

This is the point where his true skill-set comes in, in his ability to feel the market by observing the order flow and the correlations, and if he feels there is a valid reason to stick with the trade then he won’t cover it until it does what he expects it to do. And this is why he outperformed significantly on this event.

As the Short Sterling starts extending its highs again, and as GBP stays offered, he keeps feeding his Gilt position, feeling that there is a strong chance the Gilt will follow and have a second leg up. As he explains, these markets are normally very correlated during the first few minutes after a BOE rate decision, and as the flattening of the curve subsides after the strong reaction of the short-end, he expects the long-end (Gilts) to also go bid and catch up to this second leg in the Short Sterling. A few minutes later, the Gilt does catch a bid and extends its highs significantly, and our elite trader manages to double his daily PnL on this move.

Edge Spectrum on Macro News Events

An edge is cultivated and refined over many years and a trader should always strive to keep improving his edge if he has the ambition to become a top performer. As Alex, our co-founder, explains at the end of the stream, when it comes to trading fundamental and global macro news events, a trader will be faced with many different kinds of news events that produce different market reactions. 

On one end of this spectrum, you will have the really simple news, that most traders will make money on, as these are very simple to interpret and the market reacts in a very straightforward way, in the sense that it does what the trader expects it to do instantaneously. So an average trader with basic understanding, being in front of his desk and reacting relatively quickly should be able to profit out of them.

And on the other end of the spectrum, you have the very subtle, nuanced news that requires a much higher level of skill for a trader to be able to execute as efficiently as possible and profit out of them. In these instances, the market will make it a lot more difficult for a trader to make money. It will test him, it will squeeze him, it will make him doubt his conviction and trading idea. 

In these situations, it won’t be enough for a trader to just understand the macro landscape and the news environment and what drives market pricing. A top trader will have to search for clues in the price action, in the order flow dynamics, in the key correlations between other markets. In other words, it will be a much harder process to profit in these scenarios, and a trader who wishes to maximise his PnL will need to have a full artillery of skill-sets.

Our elite trader is renowned for trading global macro & central bank events and his execution skills on such situations are impeccable. To review more in-depth examples of this execution style, have a look at our Price Ladder and Order Flow Strategies training.

Moreover to gain extensive insight into how our senior and elite traders prepare for trading key central bank events, take a look at the Central Bank Trading Strategies Course

FREE Webinar Sign Up: https://www.elitetraderworkshop.com/

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy

One of the key qualities of some of the most successful traders is their ability to interpret and analyse new information at lightning speed, so that they can take a position in the shortest possible time.

In order to do so, a trader needs to always be up-to-date with current market themes, from global macro news to central bank policies so that as soon as fundamental news hits the wires, he can quickly gauge how several markets might be impacted. This will enable him to execute in the fastest and most efficient way.

In this video, Adam is going through the execution of our AXIA Elite Trader on Thursday 23rd of April 2020.

Watch The Live Trading Recording:

This was a day that didn’t start very well for our trader as he was caught short on a Gilt (UK 10-year Bond) position early in the morning and took a decent loss. However, he managed to stay focused and turn around the day to build a very solid upday. He did this mainly by executing big positions on several news comments throughout the day.

BOJ Sources

The first one came from Bank of Japan sources, where they hinted that the BOJ was ready to conduct unlimited bond buying in order to boost the economy after the Coronavirus fallout. This put pressure on the yen and our trader managed to get on the move and capitalise on it.

Merkel Comments on EU Summit

After this, German chancellor Merkel came on the wires urging the EU leaders to take a huge response to tackle the pandemic. The fact that Germany showed willingness to a big monetary response was taken as a positive by the markets and the trader managed to catch the risk-on move by selling the Bund and buying the EuroStoxx.

FT Article – Remdesivir Trial flop

Following this, there was a news article from the Financial Times with a headline that Gilead’s Antiviral drug Remdesivir had flopped on Clinical trials. The market had big hopes that this therapeutic drug was going to slow the spread of the virus, so when the negative news hit the wires, the stock markets sold off aggressively.

FT Article – Gilead’s response to the study

However, in the contents of the article, Gilead had commented that the results of the trials were inconclusive and thus not accurate. Our elite trader managed to first sell the S&P and capitalise on the knee-jerk reaction that was caused by the headline of the article, but he also managed to cut and reverse his position after he realised that the article had contradictory headlines.

EU Leaders fail to agree on stimulus

Finally, about half an hour later, news from the EU summit started hitting the wires, indicating that EU leaders failed to reach an agreement on a stimulus package to tackle the coronavirus. The trader took a big risk-off position by selling the EURUSD, the EuroStoxx and the S&P and buying the Bunds. Although the market was a bit slow to react, eventually the risk-off move happened and our trader managed to finish his day with a very solid P&L.

Learn how to trade global macro and central bank news

Summing up this blog post, we realise that the different pieces of news throughout the trading session caused significant market reactions, in which an experienced skillful trader was able to capitalise on.

Our elite trader is renowned for trading global macro events and his execution skills on such situations are second to none. To review more in-depth examples of this execution style, have a look at our Price Ladder and Order Flow Strategies training.

Moreover, to understand execution over geopolitical and central bank events, the central banks training covers in-depth central bank trading strategies.

Axia Futures
4 Endsleigh Street London GB WC1H 0DS
+44 20 3880 8500
https://axiafutures.com/

Social Media:
Twitter: https://twitter.com/AxiaFutures/
YouTube: https://www.youtube.com/AxiaFutures
LinkedIn: https://www.linkedin.com/company/Axia-Futures/
Instagram: https://www.instagram.com/axiafutures/
Facebook: https://www.facebook.com/AXIAFutures/
Medium: https://medium.com/@axiafutures/

Contacts:
Demetris Mavrommatis – Co-Founder, Head of Trading
Alex Haywood – Co-Founder Head of Strategy