Drawdowns anyone? No? I know, I don’t want any too, but GalleonFX says “things will get better”. Isn’t that comforting? Ok, I’m just being sarcastic here, so just read this update they’ve sent out. I’m not so sure I’d be willing to take their advice and “add some more funds” to the bonfire. Update follows:
This week has not started out as everyone had hoped but we still have 3 weeks to recover and a whole year to bring in our best year yet. After 4 incredible months we now find us just nine days into the month of January looking at a decent size draw down but with lots of time to recover before the month is over.
This draw down in the first week of January has us currently down as much as -25% in some accounts. Some of this draw down is derived from our USDCHF trades stopping out in the choppy first week of January, the rest of which has come from our JPY and GBP cross pair trades being stopped out within a current consolidation phase of the market.
Sometime in December last year we added a few powerful strategies on the JPY and GBP crosses pairs in order to take advantage of their dramatic moves. Many of the JPY and GBP cross pairs declined greatly at the end of December, so currently these currencies are consolidating along a narrow band near support levels, trying to determine when to make their move out. We have recently witnessed a few potential upward breakouts on these pairs to be short lived, with some of our JPY and GBP cross trades being stopped out, thus adding to this last weeks draw down. But a consolidation period cannot last forever, and some time this month there is bound to be a dramatic move on these pairs out of the narrow consolidation band.
Consolidations are often followed by a breakout or at least a decisive move in one direction or the other. When the this does happen we should be able to profit from this next move one way or the other regardless of the direction. We liken this part to stretching a rubber band; Though we don’t see much physical movement or action now, the next moves are likely to be big and shoot us back into profits.
If you have studied are previous months returns, you will know that every few months we do experience such draw downs but they do not last forever. Now is actually one of the better times to add funds or get your initial account opened and funded. It should not be long before things jump back. For example, “to put our money where our month is” the Galleon staff here is just added additional funds to our own and company accounts today totaling over $100,000.
When you trust a system, draw downs are to be expected and taken advantage of.