[The table of Flip Trades have been omitted, in consideration of subscribers. However, the main point of the write-up holds: that you should adjust your trading strategy and ranges, based on the trading environment. Don’t be a one-trick pony. Just as a good football team can win on offense, defense and sometimes special teams, you should be able to make money in many different environments.]
Last week the Portfolio just surged past the old P&L highs, and is up almost 200BUs since April. This performance is in stark contrast to the Trade List, which has been languishing. On the one hand, had we not inexplicably had Brexit, the Trade List would have performed well. But the Portfolio still would have outperformed (by a lot). So I spent some time this weekend identifying the areas where I was picking up all the additional value. There are a lot of places where value can be picked up.
These tightly-trading markets are a jobber’s paradise. You could even job some of the trades on the Trade List. Considering all that has happened this year, it’s crazy that we’ve been so range-bound. Just take a look at the EDZ8 chart for this year. As long as we are in a yield-grab environment, the curve is probably going to stay somewhat flat, and this will restrict the possible range. It won’t always be this way, but while it is (and it looks like it could be this way for a while), we should adapt to the environment. I’m a big believer in taking what the markets give you.
I had mentioned pretty much all of the following jobbing trade ideas in previous “Portfolio Trades” and “Trade Thoughts” emails. But perhaps I need to formalize it better, to make it look more “official.” We are only looking to make 0.5 to 1bp on most of these. I realize that this does not sound like a lot. But consider that 2BUs per day equals 500BUs a year. As I say in my Trading Philosophies thread, “You should always be looking to pick up loose bits of P&L whenever and wherever you can.”