(Continued from Part 2)
The more you think about it, the more it’s like you’ve won the lottery, except it’s even better for one distinct reason….
You’re gonna get all the credit for the winning numbers!
Your mentor is gifting you a giant win! This is literally a head start for you on the trading desk, and could set you up as the man on
That night you roll the lunch meeting over and over in your mind. Although the recent trend of the non-farm payroll reports has been trending nicely upwards, and the dollar has been benefiting from this trend, you know the number is going to be very poor.
Now, you have no idea where he gets his info from, but you do know he’s well connected, and you know precisely how to take advantage of this advance intell…
You’re going to buy Cable.
The GBP/USD has been on a freight train bullish trend lately, it’s the only pair that hasn’t lost ground on the recent dollar resurgence, so you’ve decided delay your long position until just before the non-farm payroll release.
Another thought sneaks into your mind… your University friend, Steve, works at a private fund in the city, also on the trading desk. So you give him a ring, after all, Steve would do the same for you, wouldn’t he??
“Hey, Steve?”,
“Yeah? Is that you??” (He sounds a bit groggy…)
“Yeah, hey, sorry to call so late, Steve. But I just had to tell you something…”
“I gotta get in real early tomorrow for the number, as do you… now what is it? I’m losing valuable beauty rest here…”
“The number, Steve. It’s gonna tank the dollar. It’s gonna be ugly, it’s 175.”
“What the……..! Are you sure? How do you know?”
“Trust me, Steve… I know. I can’t say any more, and I shouldn’t even be telling you…”
“OK, chief, thanks for calling, you can call me with intel like this any night…”
You’re pumped.. and you hope Steve remembers you in the future, should he ever have any intel…
You sleep less than 3 hours – because you know tomorrow is a big day…
+++
The next day you sprint out of bed, pile on your clothes and hustle down for your pre-work coffee…
At work, the excitement is creeping throughout the trading desk, with every minute the tension builds… everyone is keen to hear what the number is…
You’ve formulated your plan. You know how you’ll pounce on the market.
+++
It’s 8:26am, and in less than 5 minutes, the trading world will have the non farm payroll number… your palms are sweaty, and your collar seems tight… you are readying yourself for your position…
Mentally, you’ve prepared to go “all in” 40 seconds before the number is released. You’ll be sure to get all of your orders filled, and 40 seconds should be plenty of time to take a 107 million dollar long position on the GBP/USD.
Clock ticking…
3 minutes away from the news release, you’re back is sweating…
2 minutes out from the number… you’re concentrating on the orders sitting in your terminal…
1 minute away…
You hover your cursor over the orders…
It’s time, now.
Click. {20 million in}…
Click. {10 more million}…
Click, Click. {30 million, 10 million}
Click. {30 more million}
And… click {7 million}.
Cable is up over 12 pips on the back of your orders and others in the know…
+++
You’re fully loaded, and the news is 7 seconds away…
The expectation is for 230k jobs to be added… but you know the number’s gonna disappoint…
The pound’s going to jump on the news release… the market’s in for a shock when it hears only 175k jobs were created last month…
3 seconds from the number…
2 more seconds…
1…
+++
The number is…
265,000 non-farming jobs were created last month in the United States.
What??!?!?
The Cable just fell like a brick.
Something must be wrong.
You refresh your screen.
A flurry of activity on the desk… the other traders are selling Euro, selling Aussies, and, of course… selling the pound.
GBP/USD falls another 25 pips in a flash…
Then it falls another 40 pips a few minutes later…
You’re stunned. What do you do?
More importantly: how did your mentor get it so wrong??
After the market falls 140 pips against you, your positions are automatically liquidated…
You’re out.
You’re done.
You’ve lost…. over 60 million in a few minutes…
You feel sick.
+++
“Hey! Come here!” Your hear your mentor’s distinct voice…. off in the distance…
“Yeah?…” You feel sick.
“The BIG man wants to see you…”
(Ohh, crap. That’s not going to be good.)
“OK…” Maybe you’re going to get canned today… what a shock of a day. Total turnaround.
+++
You walk into the corner office.
You’re nervous… and he knows it.
“Look, I’m just going to cut to the chase, rookie.”
“Yes sir.” I know he’s firing me now…
“I know you heard something about the number…”
“Yessir, that’s true.” (He knows my mentor screwed me over? Maybe he’s gonna fire him… for being an idiot.)
“And I know you also told others about your information…. am I correct?”
“Uhhh, yes sir, I did…” (How does he know I told Steve?? This is getting downright spooky…. and weird.)
“Sorry about that, rookie.”
“Sorry for what sir, I don’t follow??”
“We used you… to make money on the number. We knew you’d tell, and that word would spread on the street. So we made up some crap about the number to push the Cable up.”
“OK….?”
“It’s nothing personal… this has happened to all the boys on the desk, you can ask them. It was your turn, you’re the greenest one on the desk.”
“I see…. well, sir, sorry about the losses…..”
“Nonsense! Don’t worry about it. We just used your position, and the rumors you spread to get our shorts in at a better price. We made 400 million today.”
“Aaaah….ok.” (Maybe I’m safe here after all…)
“You did good, rookie. You did exactly what we wanted you to do, you should always listen to your mentor… and I’m glad you did in this case.”
“OK, glad to be…”
The big guy knifed in again, “Just don’t breathe a word of this to the next trader who comes onto the desk, ok? We need these paydays.”
“Sure thing, sir. I won’t.” And with that, you shuffled back to your spot on the trading desk.
You catch your mentor’s glance as you walk by his computer, he offers a knowing nod… as if to say “thank you for letting me use your trust today…”
Sitting down at your desk, you start to digest the entire event. How your mentor set you up. How the company made money on the back of your rumor, and how you pushed the price up with your positions, and your rumor… Just to make it easy to short the Cable.
And in some sort of weird way… you feel wiser for the whole experience.
Because now you know where news spikes come from.
