Weekly Review and OpenBook Roundup

(eToro Blog) The markets focus remains firmly on Eurozone-related events and triggers with Spain once again taking the center stage though Italy is clearly also vying for top billing. Analysts’ certainty is growing that the Spanish government will be forced to seek official bailout assistance, this time for the whole, and not just for the banking sector. Several of Spain’s regional governments have now declared their own need for financial aid from the Spanish government, including those which were previously deemed economically healthy such as Catalonia and Valencia. By some estimates, as much as €140 billion in regional debt must be paid, with €36 billion to be refinanced this year.

Yields on 10-year Spanish treasury debt rose to 7.625% this week, well above the 7.0% threshold that forced other E.U. sovereigns (i.e. Greece, Portugal and Ireland) to seek financial aid. Spain’s credit rating is under review by several of the ratings agencies, and likely to see a downgrade to junk status. According to analysts from Morgan Stanley, if the big three (S&P, Moody’s and Fitch) do lower Spain’s rating to below investment grade, that would mean Spain would be excluded major indices which could prompt a major romp in index-benchmarked funds. Spain’s own major index, the IBEX, has declined 3% in the past few days, with investors fearful that a bailout will become necessary.

While many traders are of a mind that the best strategy is one which calls for a portfolio that is as diverse as possible, there are many who believe conversely that a strategy which calls for an undivided focus on a single, carefully analyzed instrument is the best way to go. OpenBook trader bajwa1075 from Australia is among those in the latter camp. The trader is listed in position #1 on the 3-month ranking board, and has a win ratio of 91.9%, profit days ratio of 62.2% and gains over the period of 77.9%. The trader achieved that position through a decision several months ago to give the EUR/USD pair his undivided attention; a 100% allocation has provided the trader with a 10.4% gain. Over the past quarter, the trader executed 149 trades, and 91.9% of those were profitable with the majority of them short positions; the trader has been an affirmed bear over the past month, in fact, with all of his trades going short. The trader has had consistent profits over the past six months; last week recording a profit of 11.4%, last month the profit was 54.4% and at 3-months 67.8% and 6-months 34.8%. A loss at 1-year indicates that the trader’s efforts to refine his strategy are paying off in a big way, and it’s a near certainty that his 116 followers and 29 copiers are sure to increase.

Trader misswoops2 from Switzerland has a slightly more diversified portfolio, holding several currency pairs as well as commodities. The trader can also be found on the 3-month ranking board in position #5, with a 73% win ratio, 56.8% profit days ratio and more than 300% gain over the period. The trader experienced a recorded loss last week of 42.9%, but that could be attributed to a relatively low number of trades (17) and the several open red positions which affect the data. At 1-month and 3-months the trader had a profit of more than 300%, and at 6-months it was 213.8%.  In the past quarter, the trader executed 211 trades, with 73% of them resulting in profit. The EUR/USD had the highest allocation at 73% with a 12.8% gain, while an 18.6% holding in gold returned 16.8%. The highest gainer in the portfolio was a small 0.2% allocation in oil which returned 21.4% over the period. The trader also has held profitable positions in the GBP/USD, the USD/CAD, and the USD/CHF; only a small stake in the EUR/GBP has resulted in a loss.

Copyright 2012 eToro Blog