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  • Back in the Saddle, Predatory News Trading Rules, The Big Books are Hedging

Back in the Saddle, Predatory News Trading Rules, The Big Books are Hedging

Your weekly dose of prop firm news and macro commentary has arrived!

Hey guys, it’s Kieran! First edition of the new newsletter, let’s go! 😁 Firstly, thanks for the well wishes for my new set up here. I’ve migrated the newsletter from Mailchimp (the old Traderseed email platform) to a new one called beehiiv. Everything seems to have gone smoothly. If you notice anything weird, or this email is going to a random inbox just drag it into your Primary inbox, and you should be good to go.

📢 Prop Firm announcements.

OK so in this new section I’m going to put any interesting announcements from the big prop firms. I do not track all firms, only the big ones and ones which I find to be interesting projects. Any firms mentioned here are not a recommendation, so make sure to do your own research.

Funded Engineer, Blue Guardian, MyFundedFX and many other firms introduce new news trading rules for Funded accounts in the vein of the following:

Any profits closed within 2 minutes before and 2 minutes after news will be deducted and will not count regardless of when the position was opened - The profits will only be invalidated if the profit is closed within the 4 minutes window, if it is closed outside the window, then the profit will count.

It is also not permissible to open any trades during the 4-minute window (2 min prior and after the news event). However, should you decide to initiate any new trades during this window, please be aware that while losses will be recognized, profits will not contribute to your payout

Any loss made is totally the trader's to bear, losses will be recognized and will not be compensated

Funded Engineer

In my opinion this is unfortunately a terrible implementation and hurts long term swing traders (like myself) more than people gambling their accounts on news. I sometimes have trades open for weeks/months. If my TP gets hit after a news event I lose weeks/months profit. IMO the rule should only apply to trades opened a few minutes before news. Even a few hours would be manageable, but a blanket rule taking away all profits from any TP hit after news, regardless of when it was opened, is insane. Hopefully these firms will take on feedback and re-work the rules so that they only target people trying to gamble on news. Fingers crossed 🤞

Funded Pips - have the best implementation of the new news rule. In their Funded account: “you cannot open a trade 2 minutes before or after the high impact news. However if you've already opened a trade before this window and it hits your TP/SL during the news, it's not a problem.” Perfect 👌

🕜 Economic calendar

With that said, it’s now more important than ever to plan ahead for Red Folder news events. Here are this week’s red folder events. This week I’m on the lookout for a good news notification service so that I can get reliable notifications on my computer and phone before red folder events. The one that I currently use only alerts me at the time of the news release, so if you have any suggestions please reply back and let me know!

Times are in Central European Summer Time (CEST)

📈 The Macro View

Sentiment slashed. The Goldman Sachs sentiment indicator has its largest drop this year and also records the lowest level of the year. We are firmly back to neutral. Still no fear in the market yet, so expect the dip-buyers to keep trying their luck.

Largest large cap outflow since December’22. This reset in sentiment is largely due to large cap selling ie Mag 7 stocks. Net flows into global equity funds turned negative in the week ending April 10 to the tune of -$20bn. 4-week average is now actually negative.

We’ve had two down weeks now in the S&P 500, totaling a whopping -2.49% drawdown 🤣 

Historical Drawdown. If the year ended today, the S&P 500's maximum drawdown of -2.49% would still be the smallest of any year in history. 1995 currently holds the full-year record with a max drawdown of -2.53%. Remember, as strong as last year was, stocks still saw a 10.2% correction, so keep an open mind.

Vix Volumes. The VIX is where the big books hedge and hence is a good indicator of the level of “fear” of major funds. So be cautioned that total VIX option volume Friday was 2.6 million, the highest since the beginning of 2018. The smart money is hedging heavily.

Looking for a Blackswan? Try this. Blackrock hits record $10.5tn in assets under management in Q1 2024, +15% YoY. When we talk about systemic risk we usually talk about the banks, however if for any reason Blackrock became a forced seller, the impact on equity markets would be unfathomable. 🤯 

Want more?

🔥 Follow me on X (Twitter)

I’ve started posting more frequently on X, so jump over there now and check out my posts. Remember to hit Follow! https://twitter.com/kierangohil_

OK so that’s the first edition in the books. Let me know your feedback on the new newsletter by replying to this email or on X, otherwise have a great trading week, watch out for those red folder events and i’ll see you next Monday! 😁 

Kieran

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