Having taken a sizable break from daily engagement with markets I wanted to document my activities, and hopefully, generate engagement and make some connections along the way.
Why EM FX?
In my Hedge fund career, I traded global macro and EM macro but specialised in EMFX. Among the more liquid EMs, there were nearly always countries at an interesting stage of their economic cycles to generate a dynamic market. If you are usually focused on core markets you can find good sharpe ratio expressions of global macro themes and great portfolio diversifiers in EM. As an investor without access to expensive trading tools, I like the price transparency, liquidity windows and relative ease of risk management.
Who is this blog for?
I’m aiming to provide something for both the individual who might want to trade EMFX part-time and professional investors. For those in the industry who trade full-time, I’ll provide a perspective unpolluted by the narratives that circulate on trading desks. For the individual investor, I can give some insights from the industry.
What will I discuss?
I will produce a regular newsletter highlighting what I’ve been looking at recently. I’ll include data and metrics that I’m using to inform my own trading, and I’ll publish periodic deeper dives into individual countries to help inform a medium-term macro view.
Framework
EMFX like all FX can be traded using a range of styles such as Carry, momentum, mean reversion and fundamental value. I can build basic tools to monitor these and highlight the most interesting opportunities. Much of the time for EM FX Macro traders it comes down to trading narratives (or themes). These will usually involve one or more of these styles. Interesting moves in FX have associated narratives. These can be established prior to any move or emerge in response to an unexpected move. Some last an afternoon and others persist for months. It’s a trader’s job to identify and evaluate these narratives. The profitable trade may be to be early to a theme, to catch the smoothest phase of the move, or even to monetise the abrupt end of a popular theme.
Follow along
Feel free to join me for the ride, and I hope we both find value along the way. In the meantime, if you’re already trading,
be disciplined and be lucky.
Stephen
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