Trading the Russia-Ukraine Crisis

what are the best markets to trade how are you executing trades how's the narrative changing all of these are the questions that are bouncing around on our trading floor these were the questions that were bouncing around on the recent career course as well relating to the ukraine russia situation and we use this as a way of coaching new traders how do you deal with a crisis in real time as it's happening how do you think up scenarios how do you execute trades what markets should you be watching all of these things provide a great learning tool what i want to show you today is how exactly you do this what's the process to execute trades in this environment how do you track certain markets how do you use correlations in real time to define when to add to positions when to exit positions and also how to nimbly in real time stay aware of a potential denial coming and managed to execute on that as well i'm going to show you how the elite pro traders do this how they can maximize their trades in scenarios like this and really extract the most out of ultimately what is a very unfortunate bad situation so i'm going to walk you through this i'll give you a bit of background as to where we are at this point in time this is from the 11th of february so the beginnings of the crisis i'll walk you through the situation that we had at that point and potential sort of scenario trades that are developing these are the kind of ideas that get banded around on the trading floor and then look at the sequence of action in the execution of this as well so that next time you get a scenario like this next time you get a news development you know how to trade it how to maximize your trades how to understand what other people are doing along the way as well and we'll also look at the smash and grab opportunity of a denial trade at the same time keep watching and i'll show you how the pros do this and how they really extract some very very significant amounts of money out of a market let's get on to it then i'll explain a little bit of the back story and then we'll get straight on to the execution phase why he got in how he got in why he's adding to certain markets at certain times it's kind of a flow of information from this trader as he as he sees it as it's happening so it's a great thing to see it so it's not just about you don't don't be amazed by the position or the size the the profit more look at this from the point of view of the thought process that's going on as the trades are being taken the why the how that's the bit to focus on so a little background it's the 11th of february let's go and have a little look at what happens on this so to give you a little bit of context we've had a build up on the russian border or on the russian border with ukraine i should say so build up of troops there now russia has said there's no plans they're not going to invade that's the line that has been towed however intelligence suggests otherwise and there is an expectation or at least degree of information to suggest russia might invade we've also had greater sort of hostile words as well russia's foreign ministry suggesting that nato and the eu has basically been disrespectful um in their response and this is ultimately increasing the odds of an invasion now the way to kind of think about scenarios like this kind of break them down break them down from you have a situation you have this military build up now this can go one of two ways you can either have no invasion this is a status quo nothing changes but there is still that military buildup which doesn't take away the possibility of an invasion so that brings you then down to a situation where this can turn out well they can move the troops back that's your kind of end to this this hostility buildup and there's a trade in that they could leave the troops there that still increases the possibility of an invasion the alternate version of this is we go down the invasion route now you don't just get the invasion what you're going to get is a situation where you get talk of it which is still going to be very significant or you get the first attacks the actual invasion so you can see by just breaking down the potential outcomes here that three of the four are varying degrees of negative off type sentiment so that's an important way to try and think about these things what's the potential next outcome you know what are the scenarios that are available just a bit of context here we're going to look predominantly at and i will he'll explain as we go through why certain markets are selected and how ladders are moved around but many main markets are going to look at here burned s p and oil oil's your obvious one oil is the kind of barometer for this situation anything that affects ukraine russia oil is the one that moves that's your kind of leading market and then you have your other sort of follow-up risk on risk off-type market so s p bund you get risk off situation you're looking for the s p to drop you're looking for burned bonds to rally safety and you're also looking for oil to rally to expect oil and bonds to go together the s p equity markets to go the opposite way so we've got some reasonably clear targets on this as well get a move towards the upside you've got a target in oil at 93.18 move to the downside in s p target down at 44.38 bund bad highs up here 166. so you've got a little bit of scope as to how far they can go you'd be looking at the s p to put in somewhere around 30 plus handles bund 100 ticks oil minimum 150 ticks just to reach those first targets so that gives you a little bit of context let me talk through then the concept of how positions are built and sort of how to wind through the information this is kind of a summary of what we're going to see in just a moment but it's all about thinking through this in terms of getting your size on getting your position on when you have the opportunity if you've got this as a tweet you're probably ahead of many people here this is where you build positions remember you've got the news early this is a chance to load up at the best prices available and your interpretation of the information is confirmation don't wait for the markets to start going and start moving because once they do you're joining everybody else in the traction phase you would call it as everyone starts picking up on the story this accelerates the markets higher now that's great if you're in but you don't want to be trying to get in there because you're chasing and if you're chasing your stops a long way down and that's a dangerous situation so whilst it feels uncomfortable early on you're better off to execute as much as possible early whilst you're getting the best prices because your risk at that point is relatively small once you start chasing your risk gets big this is a chance where you can start to add on to positions you can start getting into the more risk off markets as opposed to just your leading market exiting positions will look at this as markets start to slow down they start to steady up they get into more sort of choppy ranges this is the chance then to wind positions down what is so crucial is to stay alert to the possibilities of a change of shift in information and this is where you can get a denial trade so for every trade unless this comes from the horse's mouth you might call it a sort of yeah absolute fact an invasion yeah there's no doubt about that for example unless it's absolute fact there's always the possibility of a denial or a kind of wind back so you have to be ready for that this is very much a smash and grab trade a trade where you get in bang the market moves you get out of the trade you're not looking for a great deal more right let's get the video up then and we can see how all of this plays out right this is the first bit of info it's so important to optimize your twitter anybody who starts to talk about the ukraine russia situation at the beginning of february we start watching them news reporters journalists people who seem to have an association people who can give us information they're the people you want to be watching for now the first tweet comes from jeff bennett and the important thing to note here is how many followers he's got he's got 186 000 followers there's a lot of people that follow him so this means that people are going to pick up on this he's a credible source he's he's going to get people acting on this news and this comes out at 6 27 he actually references nick schifrin in his tweet who then a minute later confirms what's been said by tweeting essentially the same thing so this is the information that comes through you've got this this is before it's going to get to any of the news wires because obviously somebody who's picked this up and tweets it then sends it to the newswire so you're slightly ahead of most people here so you're in a great situation so now is the chance to act on this to start to build up a position so let's go and have a little look at what happens right what we're seeing here then jumps into an oil position to start with so he's building himself into this oil position early on now oil's the main focus for obvious reason oil is the uh the market that reacts most now when it doesn't shoot straight on side this is a little warning it doesn't mean you're wrong yo you've seen that information like i said interpretation is your confirmation so you know that you're waiting for other people to come along to start to join in hence why position isn't massive here we've got a position at 40 contracts and then as that starts to get back on side adds into the bund burns your other way of playing the risk off idea so it's trying to build into this risk off type play so adds into the bund buys another clip in burned oil is now starting to tick on side this is gaining traction look at the s p which is just here s p minus the yellow cursor to highlight this s p is now starting to move this is where it starts to bring in and shift the ladders around this is all about bringing focus towards key markets that you want to be watching watching at those risk markets oil to lead the charge oil to give you that guidance so now it's time to add on to this oil's getting a bit of traction all markets are starting to move around the other obvious market of course is the russian ruble you are going to expect that to weaken so now having to go at selling the russian ruble oil has still not really started to move just yet so at this phase it is still a case of building on your positions this is the taking advantage of those tweets you've got this before other people you're waiting now for others to start to pick up on this and that's going to be what instigates new positions coming in doesn't want to be jumping into too much here because we're not seeing the markets starting to accelerate but he's got position got position in oil russian ruble bund so we're ready to try and get this move going the s p's dropped down around about four handles at this point so you're seeing a little bit of a dip in the s p and still not a great deal of reaction at this point in time but everything is starting to tick along and this is what's giving you that confirmation even though you're not seeing this explosion you're still getting this confirmation of a market that is starting to move so now it starts to tick a little bit more into oil this is the advantage of getting this early build in that position whilst you're waiting for the move to develop so s p is off around about 10 handles now oil's up about 10 ticks and burns up around about eight to nine handle eight to nine ticks so now it's the time to start having to go and selling the s p it's moving towards lows of day as well so it's a chance to then see it break through the low of day and they're quite happy to sort of add on to this if it drifts offside you're gonna cut a little bit down but we get into a situation where now oil starts to move so now you're in a position where you're getting that confirmation ruble starting to drop so it adds on to the bund it's all about using the lead markets oil and the ruble to give you that little bit of clearance oil surged up 10 15 ticks then it was a chance to add on to the bund yes bun doesn't fly but you're in a situation where you're getting that confirmation you know if there's any market that's going to go on it it should be oil oil's really going now oil is now 75 ticks up so this is giving you that confirmation that you want you start seeing gold jump as well which is the the ladder to the left-hand side so gold's now running towards the upside oil now up around about not around about 80 ticks s p is now starting to tick down you're starting to see this risk on traction kicking in this is why if you get that position on early hence why the build in a large position in burned as well this is why you do that early because now if you're trying to get in you're chasing this oil's on its way oil's up 100 ticks now 110 ticks 120 ticks very soon as well so oil's flying here and this is the bit that sort of you know it's the bit that's hard to chase s p now starts to kick in everything's starting to gain traction this is the traction phase now this is the chance now to start adding on again bun's the one that's not yet going hence why the add again into bund taking advantage of a market that's still yet to continue this move so you get a little bit of a pull back from oil trim a little bit of that position down now you're starting to get this this more sort of panicky phase as this traction starts to build on but quite comfortable and this is the point now that once you've got that position built up in burned once you've got that position built in the s p oil something that now can help you with this can help guide whether you should be staying in this bearing in mind the other two haven't moved loads here compared to what oil's done so oil's helping you out here and by maintaining that position in the more volatile one but sort of managing this position you give yourself the chance to allow the burn to progress to allow the s p to progress without the need of overly cutting the size down by dealing with oil as it moves and as it keep quickly sort of breaks highs snaps back breaks high snaps back this way then you're giving yourself a chance to let the others go on that snap back though starting to build a bit more position into oil always be getting a little bit clearer in the movement with having this push higher and as it pulls back it's now adding on again but each time it adds on it's then started to just take a bit more off as we start to break up break up through highs so p l now up to around about 170 000 so just to give you a sense as to what we've done so far oil's gone miles oil's done around about 130 ticks s p around 15 handles and burned around about 20 ticks so no major movement in the others and this is where you get a kind of what you call a catch-up play where markets then start to chase this higher so what we've got big move that's giving you risk off move but bonds and equities haven't really done a great deal at this point so what we're expecting is the further oil goes the more and more spillover this is going to have the more and more people start to see the oil move and if they're not picking up on the news at least they're now looking at the oil movement thinking right this could be quite serious and we now need to start to add on to the trade so what you're not trying to do is cut the bund or the s p position significantly oil we can manage like i was saying you can get in a bit of oil get out get in a bit get out oil is the volatile one and oil's the one that's put in a decent move already the other two haven't put the move in yet this is the bit that you're now waiting for so as we go on starting to see still maintain that s p position oil continues to tick through highs and you see just posit just orders laid just above highs here waiting for this move to continue up and just using this as a chance to just exit these positions nice and steadily s p still up to 90 burned positions barely being cut down it's sort of steadily drifting out of positions you can see where we are now we're on this highlight so you're just seeing oil on this quite deep pullback and the oil pull back here is around about 40 ticks you can see there why you sort of make sure that you deal with the oil first the others are now playing catch up whilst oil pulls back you're not seeing the s p rallying back up you're not seeing bund rolling back over no those two are continuing along their direction bund is just really i'm sorry not burned oil really is on a kind of a profit take pullback you know people have seen the move up it starts to tick back and then people chase this out that's where you get that dip in um oil but as it does that you don't see that in the other markets they don't have that counter move bounce which is what you're seeing on this highlight here oil pulls back s p stays down bund continues towards the upside so everything's now starting to tick in your favor and this is that spillover as you talked about you're expecting now with the size of the oil move to spill over into other markets and that's exactly what you're seeing here the s p started to go remember 38 is your target in the s p bunder's still got a long long way to go lots of space to go in the bund here so waiting now patiently to just see these markets ticking onwards that's that's the goal at this point you're trying to wait for the epiphan to tick on you've got those sort of core positions now in burned in s p oil the majority of that of the movement has been kind of taken out of this in terms of how far this has gone you started to think yeah we we've kind of taken what you expect to get from oil but the others still the s p is only around about 15 handles down bun's now starting to move so you start to see this ticking onwards in burn you're now starting to see us bonds as well catching a bit of a bid and he talks about these as safe haven bonds as well people will generally go to the us more so than anything else in sort of a time of real panic this now starts to roll over into the u.s

equities as well so oil position has been cut down but trying to sort of keep hold of some you know if the oil does surge on and on and on and on you don't want to really be getting out of this and all does another 100 ticks from where we are so oil's driving through the highs again adds to the s p once more this is looking for the s p to push through highs burns approaching the highs of day so again similar strategy adding into bun looking for that break of high and that acceleration up you're taking advantage of this sort of accelerated action that we're now starting to see coming in five years now pushing through highs as well so you start to see everything's ticking along just right it's what you want to see you want to see the market start to push on a very typical strategy that he does use is laying orders above the high the reason for this is if a market is going to pop through the high you don't know how far it's going to go so you want to try and bank something as it pops the high as it does that then you sort of get flicked out on some of these orders which just what you get there as the five year jumps through the highs so that's now saying yep brilliant and this is where you can bank a fair bit but you get that flick and you you really sort of maximize your pay out there because you get this flick up which very quickly fills you out of numerous positions so continuing this strategy as we reach highs in the bund the five year whacks back down though is very very quick move in the five year just there five year snapback you know cuts down that burn position you see our positions drop very very quickly had nearly 300 on as well over 300 as it pushes through the high as that five year snaps back this is key information here for bond markets so this cuts that down very very quickly burn position gets chopped down s p position gets reduced oil position is maintained still to some degree and what we're going to do now is we're going to skip this forward this really is getting into the phase where it's just the kind of winding positions up at this point particularly where you've got that sort of bump in volatility that whip back down you're now starting to see people people are starting to question whether they should still be in these trades now so exit most of those positions burns actually pushed on higher from here and i'll bring the charts up for you in just a moment 35 minutes later we now get a press conference now the press conference is um held by jake sullivan security adviser to the white house and what he talks about here then is that there is signs of escalation but whilst that original story was that the u.s expects an invasion imminently he whines this back and this is the bit that i was talking about of staying aware of the situation staying aware of what could happen he winds the story back here by suggesting that an invasion could happen but suggest that to their knowledge no decision has been taken by putin this is really key because what has just happened is with that tweet that comes out it ramps up the expectation of an invasion with this press conference this is the chance to dial that back a little bit to sort of pull it's not a sense to pull the markets back but you know what the implication is here anything that steps away from the what is now being priced in invasion imminently anything that steps back from that is a chance now for markets to reverse course and you're already starting to see this you're starting to see during the press conference market starting to pull back oil now down back below 93-18 that was the original target s p's bounce but it's significantly below 38 and the bund is now all the way up it has reached that target up over 166. so let's go on and have a little look at how these things played from here starting to see already he's got a position he's stuck he's seen the market starting to roll back down they're starting to turn over from this point so builds the position up he's got position in the s p short burned short oil so just to show you where we are on the chart we're on the on the highlight so we've seen the kind of spikes into highs and burns in the spice ties in oil and now seeing the s p starting to bounce back stabilize as well so i just pause you hear these are the comments that you get from from sullivan as he's talking the news that comes out on the wires at um 7 15 and 40 seconds so we're at this point there's a little clock up here we're about 40 seconds away from this at this point is that the us does not believe that putin has made a final decision on the invasion and he's asked this is the question on the right-hand side pbs reported a little while ago the united states does believe that putin has made a decision and also communicated that decision to the russian military is there accurate and sullivan this is the this is the wine back it's not quite a denial as such but it's a wine back of this the report that you've referenced which i have not seen yet it does not accurately capture the us government's view today so there you go that's the wind back of that tweet he says we're not saying a decision has been taken what we are saying is that what we have sufficient level of concern about on what we are seeing on the ground and what our intelligence analysts have said but no final decision has been taken by president putin that's the key bit of info here because the market is now thinking a decision has been made and that we're now going to start to see the moves on this so there's the information bearing in mind she's still a little while away he's still talking at this point so you're starting to see the sense of the story coming through so now you start to get the beginnings of the questions coming in you start to so you can kind of see the answers coming as he starts to say them which is why then the s p position gets banged up 200 plus lots the bun position 200 lots oil position doesn't really change a great deal he's already short oil oil's the one that's got less scope to go back bearing in mind oil's already most of the way back the s p is still not even up at 38. burns still miles from where we left at the last point now you get that jump in the s p so hits a little bit more to try and get get the move in the s p oil's now starting to come off further as well burns now starting to tick down you're getting all of the action coming through now so what he's looking for this is what you call a smash and grab type move you get the quick risk on move and once you start to get this choppy action this is the point where you start to think um maybe people are going to be coming out of this bearing in mind this is a smash and grab type trade so now it starts winding the positions up you're not looking at this to be any kind of major movement this is where you've got to you start to see the markets bouncing back so this is the move that unit these just taken advantage of the smash and grab part of the move marks are starting to bounce back this is the acceleration down in the bund 65 54 is the low of this move this is the drop in oil bearing in mind we're already on the way down in fact oil is the one that doesn't really come off on this you know markets are seeing this heightened tension as the potential of um of the move to continue oil's already in a very very bullish situation anyway burn starts to come off s p gives you this quick flick up towards 45 and this becomes essentially the kind of the end of the trade so it starts to wind these positions down quite quickly s p's now sort of chopping around you start to see burn lots and lots of orders getting laid down now this is just the chance to try and edge your way out of the trade not looking for too much more yeah the main bit of the moves been been had he's got just over 500 grand on the trade now as well and so this is now the point where you're thinking right the job's done we've taken as much as we can get out of this trade wind those positions down you see now completely out of the s p out of oil or about 20 contracts and mostly out of burned all down to 25 contracts so that's where you've where you've managed to get to a little while later quickly round all of those positions down the job is done and just over about 500 000 up on the trade that's how you execute on these types of trades okay so you've just seen it that's how you execute on news how you use leading markets then add on as the story starts to gain traction but remember this sequence when you're executing on news it's about getting that position on when you have the greatest opportunity this is inherently at the beginning of the move yes it's uncomfortable but it's much better and much more comfortable than chasing as everybody else does you will end up with much much worse prices you will end up with greater risk greater whips back on you think about that oil pull back at one point it pulls about 40 ticks if you've chased this chances are that pullback is going to put you back to a scratch put you offside makes you uncomfortable if you're in when you get that first bit of news you're ahead of the market you can sit through those types of pullbacks and then as that story starts to develop out as it gains more traction the risk off markets start coming in you start seeing the s ps beginning to tick along the bun beginning to tick up the five year starting to move all of this now is the cross market flows that you're looking for once you get that now you've got the opportunity to sort of maximize this trade and then it's all about exiting get yourselves out once it starts to stall once it starts to slow down you start seeing the correlations break down a little bit where you've got that whip back in the bonds it's not going to always be a whip back in the bonds but it's about recognizing how markets are interacting with each other spend lots of time trying to coach traders on this something we do in the macro part the career course it's all about getting traders to understand these correlations understand how to deal with these moves as they happen and then finally make sure you're always switched on it's a really easy thing for traders to look at their p l think brilliant this has been a top day and sit back but if this is a story that has not been absolutely confirmed or denied there's potential for an additional piece of information so let's look at the key takeaways we've seen the action you got that tweet and then you got the denial part and the whip back the denials are typically much much smaller in size than that main move but when you get this denial bit that's the bit where you still get the chance for this smash and grab i kind of i always call it sort of bonus ticks you never know that it's going to happen necessarily but you're aware that it potentially could happen so the key takeaways from this this this is this trader's view of it that this is a slow burning piece of news because it comes out on twitter first and because it then gains traction you know it comes from a couple of people on twitter with yeah 180 thousand followers but they're not massive massive names on twitter and the second person um shiffrin has only around about seven and a half thousand followers so it's finding these people that may not have massive following but will have the news you get this slow pace move as well as more and more people start to become aware this is where the where you're waiting for it you're waiting for this acceleration to come when you get that that's the bit that you're after that's when you can get onto the trade that's where markets become very sensitive when markets really start to move make sure you know what the most sensitive market is of course in this situation oil and the russian ruble are the ones to watch they guide all of the action and every other market is likely to see their action and follow this on the other key takeaway from this is to stay aware that for every piece of news until it is absolutely factually confirmed there is always possibility of this being verified or denied both of which are going to lead you to a trade these trades over time generally diminish in value so if you get further kind of verification then the each time this will have slightly less impact the same with a denial doesn't mean there's not an opportunity but understand the opportunity the opportunity is inherently smaller and so therefore it implies a smash and grab type action as opposed to a more hit and hold slow burning type move which is what we originally got i know this has been a lot to take in i hope this has been very helpful for you guys this is the kind of level of detail that you need the kind of level of detail that we coach all of our new traders this is where we excel in the education side because we have this level of detail of how and when to execute trades even in highly volatile news driven markets it's a process it's a method to do this this is what we're trying to teach all of our traders this forms a big part of the career course it forms a big part of ongoing mentoring and workshops for all of our traders i'll leave you there though guys hopefully you've taken something from this rewatch it as well make sure you're really picking up as much as you possibly can i'll leave you there have a great rest of your day [Music] you

2022-04-05 16:13

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