Results of the latest Global Trader Futures Monitor, which measures the futures trading behaviour of more than 6,000 South African retail investors on a monthly basis, show that following on from trading behaviour in September, traders still believe a pullback in the value of the JSE is imminent, with 89% of the value of trades during October being short the local index future.
This is in spite of the index consistently reaching new highs throughout the month.
“The ALSI has been a star performer in October, causing much wailing and gnashing of teeth,” explains Andrew Kinsey, Head of Risk at Global Trader. “A solid and oftentimes spectacular rise towards all-time highs has made the Alsi the star outperformer in global index markets. GT247.com clients, meanwhile, have been overwhelmingly short the market in this period that has cost them trading capital.”
In addition, traders remained steadfastly long on commodities during the month of October, resulting in costs to traders for the first time in a few months.
According to Kinsey, 85% GT247.com clients were positioned long on gold in October. “Adding to their costs, traders extended the point buying on dips as gold has quietly, but in a reasonably determined fashion, slipped from the highs of the Northern Hemisphere summer. In spite of this, GT client positioning has remained bullish, indicating their anticipation of an increase in gold prices due to contracted supply as a result of the recent interruption to operations,” he says.
Furthermore, investors remained long on Brent Crude with 63% of traders during the month being positioned long.
The GTFM is compiled using the trading data of all retail investors on Global Trader’s GT247.com online trading platform over the month, to reveal the broad asset classes investors are trading (commodities, equity indices, currencies) as well as the positions or directions of their trades within individual instruments, i.e. whether they are choosing to go ‘long’ or ‘short’.
Gold
The above graph indicates the trading patterns of online investors on a daily basis throughout the month of October on gold. The green area indicates the percentage of trades by value, at the end of each trading day, that were long, while the pink area indicates the percentage that were short.
“Gold remains a favourite of GT247.com clients,” says Kinsey. “However, for the first time in a number of months a buy and hold strategy among GT247.com's gold trading clientele has not been rewarded as the slip from the highs of the Northern Hemisphere followed a failure to break through the $1800 / oz level that had been widely anticipated and opened up the key technical levels at $1690 and medium term support in the $1625-$1665 area,” he says.
According to Kinsey, traders are confident in Gold’s ability to hold its ground – hence the steadfast long approach adopted by the GT247.com client base.
Brent Crude
“Crude oil also had a month of reasonably benign range trading. GT247.com clients, as a whole, were on top of the moves that did occur, raising short positions as the market approached $114 and buying into the sell-off as the market traded off the short term cyclical high. However, commitment to positions in this market has been relatively light in recent months,” says Kinsey.
Alsi
“The ALSI has been a star performer in October, causing much wailing and gnashing of teeth. A solid and oftentimes spectacular rise towards all-time highs has made the Alsi the star outperformer in global index markets. GT247.com clients, meanwhile, have been overwhelmingly short the market in this period that has cost them trading capital,” explains Kinsey.
Trading patterns on other major instruments
The below three graphs indicate the trading patterns of online investors on a daily basis throughout the month of July across major instruments – EUR/USD and the Dow Jones. The green area indicates the percentage of trades by value, at the end of each trading day, that were long, while the pink area indicates the percentage that were short.
EU/USD
Trading Positions: 34% Long; 66% Short
“As was the case with the trajectory of EUR rates over the month, GT247.com's client positioning was similarly irresolute. Trading in a relatively (compared to the last couple of months) tight trading range gave GT clients small opportunities to get set in large positions that offered quick and beneficial profit opportunities. The most noticeable positioning occurred as the market approached 1.3200 and GT clients raised their overall short positioning,” says Kinsey.
Dow Jones
Trading positions: 66% Long; 34% Short
According to Kinsey, the Dow has been a tough market for most traders in the last month, mostly reacting to economic announcements interspersed with softer than expected earnings from major US companies. “For the most part, GT client positions were also in the doldrums and the average age of positions rose as there did not appear to be a convincing reason to either add or even take off existing positions. It is in markets such as these that large moves are often spawned as traders get unnaturally comfortable with their positions - to their cost ultimately,” he says.
Levels of trading activity across instruments
According to Kinsey, there was no notable shift by traders across the instruments during October.
The value of trades in currency index futures as a percentage of overall trades, decreased from 28% in September to 26% in October.
Meanwhile, the value of Equity Index Futures traded during the month increased by 1% - from 54% of total trades in September to 53% of total trades in October. The GTFM also revealed that the value of Commodities Futures as a percentage of overall trade increased marginally from 18% in September to 21% in October.
What's happening on the markets?
Results of the latest Global Trader Futures Monitor, which measures the futures trading behaviour of more than 6,000 South African retail investors on a monthly basis, show that following on from trading behaviour in September, traders still believe a pullback in the value of the JSE is imminent, with 89% of the value of trades during October being short the local index future.
This is in spite of the index consistently reaching new highs throughout the month.
“The ALSI has been a star performer in October, causing much wailing and gnashing of teeth,” explains Andrew Kinsey, Head of Risk at Global Trader. “A solid and oftentimes spectacular rise towards all-time highs has made the Alsi the star outperformer in global index markets. GT247.com clients, meanwhile, have been overwhelmingly short the market in this period that has cost them trading capital.”
In addition, traders remained steadfastly long on commodities during the month of October, resulting in costs to traders for the first time in a few months.
According to Kinsey, 85% GT247.com clients were positioned long on gold in October. “Adding to their costs, traders extended the point buying on dips as gold has quietly, but in a reasonably determined fashion, slipped from the highs of the Northern Hemisphere summer. In spite of this, GT client positioning has remained bullish, indicating their anticipation of an increase in gold prices due to contracted supply as a result of the recent interruption to operations,” he says.
Furthermore, investors remained long on Brent Crude with 63% of traders during the month being positioned long.
The GTFM is compiled using the trading data of all retail investors on Global Trader’s GT247.com online trading platform over the month, to reveal the broad asset classes investors are trading (commodities, equity indices, currencies) as well as the positions or directions of their trades within individual instruments, i.e. whether they are choosing to go ‘long’ or ‘short’.
Gold
The above graph indicates the trading patterns of online investors on a daily basis throughout the month of October on gold. The green area indicates the percentage of trades by value, at the end of each trading day, that were long, while the pink area indicates the percentage that were short.
“Gold remains a favourite of GT247.com clients,” says Kinsey. “However, for the first time in a number of months a buy and hold strategy among GT247.com's gold trading clientele has not been rewarded as the slip from the highs of the Northern Hemisphere followed a failure to break through the $1800 / oz level that had been widely anticipated and opened up the key technical levels at $1690 and medium term support in the $1625-$1665 area,” he says.
According to Kinsey, traders are confident in Gold’s ability to hold its ground – hence the steadfast long approach adopted by the GT247.com client base.
Brent Crude
“Crude oil also had a month of reasonably benign range trading. GT247.com clients, as a whole, were on top of the moves that did occur, raising short positions as the market approached $114 and buying into the sell-off as the market traded off the short term cyclical high. However, commitment to positions in this market has been relatively light in recent months,” says Kinsey.
Alsi
“The ALSI has been a star performer in October, causing much wailing and gnashing of teeth. A solid and oftentimes spectacular rise towards all-time highs has made the Alsi the star outperformer in global index markets. GT247.com clients, meanwhile, have been overwhelmingly short the market in this period that has cost them trading capital,” explains Kinsey.
Trading patterns on other major instruments
The below three graphs indicate the trading patterns of online investors on a daily basis throughout the month of July across major instruments – EUR/USD and the Dow Jones. The green area indicates the percentage of trades by value, at the end of each trading day, that were long, while the pink area indicates the percentage that were short.
EU/USD
Trading Positions: 34% Long; 66% Short
“As was the case with the trajectory of EUR rates over the month, GT247.com's client positioning was similarly irresolute. Trading in a relatively (compared to the last couple of months) tight trading range gave GT clients small opportunities to get set in large positions that offered quick and beneficial profit opportunities. The most noticeable positioning occurred as the market approached 1.3200 and GT clients raised their overall short positioning,” says Kinsey.
Dow Jones
Trading positions: 66% Long; 34% Short
According to Kinsey, the Dow has been a tough market for most traders in the last month, mostly reacting to economic announcements interspersed with softer than expected earnings from major US companies. “For the most part, GT client positions were also in the doldrums and the average age of positions rose as there did not appear to be a convincing reason to either add or even take off existing positions. It is in markets such as these that large moves are often spawned as traders get unnaturally comfortable with their positions - to their cost ultimately,” he says.
Levels of trading activity across instruments
According to Kinsey, there was no notable shift by traders across the instruments during October.
The value of trades in currency index futures as a percentage of overall trades, decreased from 28% in September to 26% in October.
Meanwhile, the value of Equity Index Futures traded during the month increased by 1% - from 54% of total trades in September to 53% of total trades in October. The GTFM also revealed that the value of Commodities Futures as a percentage of overall trade increased marginally from 18% in September to 21% in October.
Would you like to comment on this article?
Register (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Trending
Latest Videos