The hedge fund, run by former JP Morgan traders, is focusing on two currencies - CNY and TRY.
Will Volatility continue to rise in 2019? Well an artificial intelligence (AI) hedge fund run by two former derivatives traders from JP Morgan Chase & Co., Ensemble Capital Pte Ltd, is betting that it will.
Specifically, the hedge fund, which was set up by former foreign exchange (Forex) option traders Damien Loh and Atsuo Ogaki, is focusing on two currencies in particular to make money - China’s yuan (CNY) and the Turkish lira (TRY).
According to an article from Bloomberg, the two traders believe that there’s still a lot of room for volatility next year even though trade war tensions are easing and emerging markets are quietening down. The traders’ strategy is: go long volatility and fade the rally.
Speaking on his strategy, Loh, the chief investment officer at Ensemble, said: “Generally volatilities will grind higher, but what will happen is there’s always going to be a big spike in the front end, and you should look to fade it. Be long volatility, but be nimble enough to sell the front end.”
The news of upcoming forex volatility is no doubt welcome information for many brokers in the industry, which have been weighed down by low volatility this year. However, despite the low trading activity, brokers managed to report solid first half-year financials, which in theory, would only be boosted higher in an active market.
Ensemble Capital
Ensemble uses deep-learning algorithms to analyze market data and forecast moves in order to help traders generate returns. The absolute return fund doesn’t just monitor trading levels for currencies, but a number of asset classes.
The AI-driven hedge fund is targeting double-digit returns, however, at present, it has managed to return around two percent. According to Loh, this is because the investment staff have been placing their own hedges on trades, rather than leaving it up to the machine.
So far in 2018, emerging currencies have seen large swings, with a gauge of volatility up 12 percent year-to-date, the most since 2016. These were driven by a number of factors, namely trade war tensions between the United States and China, as well as a financial crisis in Turkey.
The events in Turkey saw the TRY fall to record historic low levels, with the currency losing 45 percent of its value against the US dollar by mid-August since the start of the year. The downward trend wasn’t just limited to the TRY, as it dragged down other currencies, such as the Argentine peso and the Indian rupee with it.
As a result of the falling TRY, numerous forex brokers suspended trading in the currency. As Finance Magnates reported, one such broker was Alpari, who cited “economic instability” in Turkey as the reason behind its decision,
Is it peace at last for emerging currencies?
Now, swings in the lira have calmed down after the country’s central bank hiked interest rates to combat a rapidly-rising inflation. Furthermore, the United States and China called a truce on their trade war on Monday, which caused a drop in the CNY. However, this does not mean its peace at last, as Turkey’s inflation is still high.
“People have been chasing returns and a lot of real money has been put in there. But if we start to see risk assets sag again, it’s likely they’ll depart from the Turkish market,” Loh commented.
On the US-China truce, Loh added: “there will still be a lot of back and forth, the economy is still going to slow down.”
Will Volatility continue to rise in 2019? Well an artificial intelligence (AI) hedge fund run by two former derivatives traders from JP Morgan Chase & Co., Ensemble Capital Pte Ltd, is betting that it will.
Specifically, the hedge fund, which was set up by former foreign exchange (Forex) option traders Damien Loh and Atsuo Ogaki, is focusing on two currencies in particular to make money - China’s yuan (CNY) and the Turkish lira (TRY).
According to an article from Bloomberg, the two traders believe that there’s still a lot of room for volatility next year even though trade war tensions are easing and emerging markets are quietening down. The traders’ strategy is: go long volatility and fade the rally.
Speaking on his strategy, Loh, the chief investment officer at Ensemble, said: “Generally volatilities will grind higher, but what will happen is there’s always going to be a big spike in the front end, and you should look to fade it. Be long volatility, but be nimble enough to sell the front end.”
The news of upcoming forex volatility is no doubt welcome information for many brokers in the industry, which have been weighed down by low volatility this year. However, despite the low trading activity, brokers managed to report solid first half-year financials, which in theory, would only be boosted higher in an active market.
Ensemble Capital
Ensemble uses deep-learning algorithms to analyze market data and forecast moves in order to help traders generate returns. The absolute return fund doesn’t just monitor trading levels for currencies, but a number of asset classes.
The AI-driven hedge fund is targeting double-digit returns, however, at present, it has managed to return around two percent. According to Loh, this is because the investment staff have been placing their own hedges on trades, rather than leaving it up to the machine.
So far in 2018, emerging currencies have seen large swings, with a gauge of volatility up 12 percent year-to-date, the most since 2016. These were driven by a number of factors, namely trade war tensions between the United States and China, as well as a financial crisis in Turkey.
The events in Turkey saw the TRY fall to record historic low levels, with the currency losing 45 percent of its value against the US dollar by mid-August since the start of the year. The downward trend wasn’t just limited to the TRY, as it dragged down other currencies, such as the Argentine peso and the Indian rupee with it.
As a result of the falling TRY, numerous forex brokers suspended trading in the currency. As Finance Magnates reported, one such broker was Alpari, who cited “economic instability” in Turkey as the reason behind its decision,
Is it peace at last for emerging currencies?
Now, swings in the lira have calmed down after the country’s central bank hiked interest rates to combat a rapidly-rising inflation. Furthermore, the United States and China called a truce on their trade war on Monday, which caused a drop in the CNY. However, this does not mean its peace at last, as Turkey’s inflation is still high.
“People have been chasing returns and a lot of real money has been put in there. But if we start to see risk assets sag again, it’s likely they’ll depart from the Turkish market,” Loh commented.
On the US-China truce, Loh added: “there will still be a lot of back and forth, the economy is still going to slow down.”
Weekly Roundup: Earnings from XTB, Plus500, and Naga, Q3 Slowdown Hits Coinbase, and More
FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
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Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
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FMLS:24 | Shaping the Next Era of Financial Evolution
FMLS:24 | Shaping the Next Era of Financial Evolution
Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
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Welcome to FMLS:24 – the premier event where influential brands and leaders in trading, payments, fintech, and digital assets come together!
Join over 2,500 industry professionals, engage with 150+ expert speakers, and discover endless opportunities with 70+ top exhibitors. FMLS:24 is where senior executives and decision-makers gather to close deals, forge new partnerships, and strengthen connections with long-term clients.
Whether you’re in finance, technology, or payments, this summit is your gateway to future growth, meaningful collaborations, and industry-leading insights.
👉 Don't miss out – secure your ticket now at https://events.financemagnates.com/ZQEYy0?utm_source=youtube&utm_campaign=fmls24-awareness&utm_medium=video&RefId=MLS%3A24+Video+Promo
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FM's Andrea Badiola Mateos at LSEG's Cyprus event
FM's Andrea Badiola Mateos at LSEG's Cyprus event
FM's Andrea Badiola Mateos at speaking in a panel discussion at LSEG's Cyprus event
FM's Andrea Badiola Mateos at speaking in a panel discussion at LSEG's Cyprus event
The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar
The Role of PAMM, MAM & Copy Trading in Business Growth Strategies | Webinar
The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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The copy trading market is projected to double in size, growing from $2.2 billion to $4 billion by the end of this decade. In light of this, brokers and financial institutions are increasingly adopting PAMM, MAM, and Copy Trading solutions to scale operations and drive profitability. In this insightful webinar, Sergey Ryzhavin, Product Owner at B2COPY, outlines the advanced features of the B2COPY platform, showcasing how it enhances Copy Trading, PAMM, and MAM performance. Sergey also explores strategies for using these tools to attract new clients, improve customer engagement, and create additional revenue streams.
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Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24
Join us at FMLS:24 to connect with global institutional brokers. Secure your spot today! #fmls24