Good morning traders
šļø On the desk today
š The Tape: where yields, the dollar and gold closed the week.
š¦ What the Fed minutes said, and why gold shrugged.
š§² Four stocks, one bet. The week my sizing earned its keep.
š Someone already proved this. The study that explains it.
š The Tape
ā US 10-year yield: 5.24% at Friday's close.
ā Dollar index: 102.21.
ā Gold futures: $4,216.30, up 1.3% on the week.
Next week's big one is September's CPI on Wednesday 14 October.
š¦ What the Fed minutes said
The minutes of the Fed's September meeting came out on Wednesday afternoon. The line that matters: most officials thought another rate rise "would likely be appropriate by year end".
That wasn't news. In September the Fed's own projections already put its rate at 4.1% by the end of this year, one more quarter-point rise above today's 3.75% to 4%.
Gold dipped on Wednesday and took it back by Friday, finishing the week up 1.3%.
š¬ The Desk Take: A central bank repeating itself doesn't move a price twice. The number that can still surprise is Wednesday's inflation print.
š§² Four stocks, one bet
Same two days. The coin, then four companies that mine it.
Going into this week I held four bitcoin mining stocks, each on its own trade idea with its own stop.
Bitcoin fell 4.5% between Tuesday and Thursday. Over the same two days the four miners fell 8.8% to 13.5%. A miner's revenue drops with the coin while its power bills and debt stay the same, so the shares move two or three times as far.
All four hit their stops inside three days.
Same four stops, sized two ways.
I normally risk 1% to 2% of the account on a trade. On these four I'd cut it to 0.5% each, because they hung off the same thing. Four full stops cost 2% of the account. At my normal size the same week would've cost 4% to 8%.
š¬ The Desk Take: Count your positions by what moves them. The number of tickers on your screen tells you how many charts you're watching, and nothing about how many bets you've made.
š Someone already proved this
In 2001 two economists, FranƧois Longin and Bruno Solnik, published a study in the Journal of Finance on the five biggest stock markets from 1959 to 1996.
In the big up months, those markets moved together about as much as usual. In the big down months, they moved together far more. In their words: "Correlation increases in bear markets, but not in bull markets."
So the spread you count on is thinnest on exactly the days you lean on it.
ā±ļø One thing worth doing today
Five minutes with your open positions.
1. Sort every open position by what drives it. Anything that would lose on the same headline goes in one pile.
2. Add up the risk in each pile. That's the real size of the bet.
3. Cap each pile at one normal trade's risk. If it's over, cut every position in it until it isn't.
The Trade Risk Calculator works out the position size for any risk you pick in about ten seconds.
If you want to see how you'd handle a week like this one, the Trading IQ quiz takes a few minutes and emails you a report.
š¬ The full version
This week's Recap on Substack has the rest: every trade that closed, losers included, the Fed minutes against gold, and a deep dive on a Michigan utility with a check you can run on any company. It's free to read.
If you keep your own numbers, the RB Trading Journal works the R out on every trade, 20% off with code RBT20.
Everything in one place: start.rbtrading.site