October 2024 was a challenging month for Acuity Trading's signals, following a notably strong performance in September. Despite a downturn in October, the results reflect the nature of dynamic market conditions that can bring fluctuations. This past month was marked by heightened volatility across multiple asset classes, with complex economic and geopolitical factors shaping the outcomes. Forex, indices, commodities, and cryptocurrencies all experienced varying levels of instability, particularly in the lead-up to the U.S. presidential election, which has historically added uncertainty to markets.

In this blog post, we will delve into how Acuity's signals performed across each asset class, highlighting key trading days, the best and worst performers, and a standout trade for October. While the month posed challenges, our approach remains grounded in a commitment to delivering high-quality analysis and adapting to evolving market conditions. October may not have met the gains of September, but our broader yearly performance remains positive, and we look forward to continued resilience and growth in the coming months.

Asset Class Summary

Forex
October 2024 saw significant volatility in foreign exchange markets, driven by a series of key events and economic developments. The month kicked off with the closely watched US Nonfarm Payrolls report, which had substantial implications for USD pairs amid concerns over job market trends and Federal Reserve policy. The release of FOMC minutes on October 9th provided crucial insights into potential future rate decisions, further influencing USD movements, particularly against the Japanese yen. The OPEC Monthly Report and the Bank of Canada's anticipated rate cut on October 23rd impacted commodity-linked currencies, especially the Canadian dollar. Geopolitical tensions in the Middle East added an layer of uncertainty to market dynamics. Throughout the month, the US dollar exhibited strength, reversing the trend from September when the DXY index dropped by 1.0%. This complex interplay of economic data, central bank decisions, and geopolitical events created a challenging and dynamic environment in the forex market, with rapid shifts in sentiment and unexpected developments characterising much of the month's activity.

Indices
The global equity markets are significantly influenced by economic data, corporate earnings, and political uncertainties, particularly surrounding the upcoming U.S. presidential election. The U.S. equity market has reached new highs, with the S&P 500 and Nasdaq driven by optimism about corporate earnings and expectations of further monetary easing from the Federal Reserve. However, rising volatility, as indicated by the VIX index, reflects investor concerns about market stability amid political uncertainty. In Europe, while the DAX has shown some gains due to strong performances from key companies, it remains under pressure from a weakening Euro Area economy. The FTSE 100 has been relatively flat, facing challenges from negative earnings growth. Overall, the election is expected to create additional volatility in the markets as investors assess potential policy shifts that could arise from either candidate's victory.

Commodities
In October 2024, the commodities markets, particularly precious metals and oil and gas, experienced significant fluctuations driven by geopolitical tensions and supply concerns. Precious metals like gold and silver have reached new highs, benefitting from a weaker Dollar and ongoing instability in the Middle East. In the oil market, Brent crude prices remain under pressure and continued to trade near 12 month lows.

Cryptocurrencies

In the cryptocurrency markets, volatility has been pronounced throughout October 2024, driven by regulatory developments and market sentiment. Bitcoin has seen fluctuations in response to news regarding potential regulations from various governments, including discussions about stricter oversight in the U.S. and Europe. The overall market sentiment has been influenced by macroeconomic factors such as inflation concerns and interest rate expectations, which have historically affected risk appetite among investors.

October was a challenging month for our trading signals, with a negative return of 18.47% and a maximum drawdown of 33.67%. This follows September's strong performance but underscores the volatility in recent market conditions. Despite this setback, our focus remains on optimising performance and mitigating drawdowns to ensure long-term growth and stability.

The simulated performance statistics provided are based on the assumption of risking 1% of trading capital per trade. It is crucial to understand that past performance, whether actual or simulated, is not indicative of future results. 

12 month simulated performance statistics

Asset Class Performance

FX Crosses, for the 2nd straight month achieved the highest returns at 2.15% and had a 46.67% win rate, though they also faced a substantial drawdown of -9.15%. FX Majors showed moderate losses of 0.54% with a win rate of 39.29% and a relatively low drawdown of -4.22%. Commodities had negative returns of -3.10%, with a drawdown of -8.77% and a win rate of 38.89%. Indices experienced the largest drawdown at -18.06%, resulting in a return of -12.44% and a win rate of 39.18%. Cryptocurrencies had a win rate at 40.54% with a return of -3.48% and a drawdown of -5.72%. Overall, FX Crosses performed best in terms of returns, while Indices saw the largest challenges in terms of drawdown.

In early October, the US Dollar broke out of a bearish channel, leading to a stable, gradual uptrend. This predictable price movement supported technical analysis and created favourable trading conditions in FX markets. In contrast, major global indices displayed diverging performances, with US equity markets consistently reaching new highs while other global indices lacked clear direction, resulting in choppy trading conditions. The All-World Index, for instance, remained range-bound and directionless throughout October, highlighting the disparity in global market trends.

Best/Worst Performing Markets

Platinum showed the highest return at 6.51% with a win rate of 66.67%, though it also experienced a drawdown of -1.79%. The FTSE achieved a slightly lower win rate of 75% but posted a more modest return of 3.86% and a minimal drawdown of -0.04%, indicating more stable performance. NZDUSD also held a win rate of 66.67%, yielding a return of 3.34% with a drawdown of -1.01%. Overall, Platinum and NZDUSD provided strong returns with moderate risk, while FTSE showed stability with a high win rate and minimal drawdown.

In our recent analysis, three assets underperformed: the DOW, DAX, and GBPJPY. The DOW had the lowest win rate at 22.22%, with a return of -2.83% and a drawdown of -4.44%, indicating significant volatility and limited success in upward trades. The DAX, with a win rate of 33.33%, showed a slightly higher drawdown of -4.17% and a return of -3.50%, also reflecting a challenging period. GBPJPY fared somewhat better, with a 20% win rate and a smaller drawdown of -2.01%, resulting in a return of -2.02%. Overall, these assets exhibited low win rates and negative returns, highlighting higher risks and volatility in the current trading environment.

In October, Platinum demonstrated consistent upward momentum, appreciating 11.64% from its lowest to highest point. Our team capitalized on this trend with both long and short positions, executing a balanced approach of 4 long and 5 short trades, resulting in steady gains. The most significant return came early in the month, marking our largest trade win. On the other hand, the US30 (Dow Jones) presented challenges due to choppy trading conditions and a developing top pattern on the 4-hour chart. Despite the short-term volatility, the long-term trend remained positive, leading our analysts to predominantly focus on buy trades, completing 8 buys and 1 sell during the month. This approach reflects a commitment to the broader upward trend, though short-term conditions affected overall performance.

Major Macroeconomic Data

Here is a snapshot of how our trade ideas performed on the day of key macroeconomic data.

Non Farm Payrolls - 4th October 2024

October's Non-Farm Payrolls report came in well above expectations, with an actual reading of 254K against the forecast of 140K. This stronger number prompted a strong move higher in the US Dollar. On the day of the release, we executed a significant number of trades, achieving a positive overall outcome of 6.74%. Key trades that hit their targets included GBPUSD, EURSEK and S&P500.

US CPI (MoM) - 10th October 2024

The US CPI data slightly exceeded expectations, initially causing the US Dollar to dip, which raised concerns about a possible delay in rate cuts. However, this trend quickly reversed in the hours following the release. The rally persisted throughout October. Fewer trades than usual were triggered that day, yielding mixed outcomes. The win rate was close to our average, but the successful trades lacked significant follow-through.

Trade of the Month

Our team of expert analysts carefully examines the market daily to pinpoint high quality trading opportunities. Each analyst offers a distinct viewpoint, utilising their vast experience to create precise market forecasts.

Our October trade of the month was AUD/JPY. Observing the currency pair's upward trend, our analyst identified a triangle pattern, suggesting a continuation of the bullish trend. Anticipating a breakout, they applied classical technical analysis to define precise entry and exit points. This strategic approach aligned with the expected pattern breakout, leading to a successful trade.

Platinum - 2nd October 2024

• Direction: Buy
• Entry Level: 99.00
• Stop: 98.50
• Target 1: 100.50
• Target 2: 100.75
• Risk/Reward: 1 : 3

The setup

• Price continues to trade within the triangle formation
• Risk/Reward would be poor to call a buy from current levels
• A move through 99.75 will confirm the bullish momentum
• Momentum is flat, highlighting the lack of clear direction
• The measured move target is 100.75

Here's a graphical depiction illustrating the trade setup and the analytical process behind the AUDJPY.

The Outcome

AUDJPY reached our targeted entry level at 05:56 (UK) with a drawdown of 25 pips. The price swiftly rose from the entry point, eventually breaking out of the triangle pattern.

Buying continued throughout the trading session, gaining further momentum as it broke through the triangle. This buying pressure, spurred by the technical breakout, propelled the currency pair to our first target of 100.50 at 15:59 (UK). Prices continued to rise into the next trading day, eventually peaking at 101.27, which was well above our second target of 100.75.

The price topped out on Thursday 3rd October at 101.27, which was well past our 2nd target at 100.75, without hitting the stop loss.

Triggered at: 05:56 UK (2nd October 2024)

Exit at: 15:59 UK (2nd October 2024)

Duration: 10 Hours and 3 minutes

Outcome: 3R

Though October presented unique challenges with increased volatility and geopolitical concerns, Acuity Trading remains well-positioned for the months ahead. Our analysis approach allows us to adapt to fluctuating market dynamics and continue building on the progress we've made throughout the year.

As we anticipate further shifts in the market, particularly with the U.S. presidential election around the corner, we’re optimistic that our data-driven insights and rigorous analysis will continue to deliver value to our clients. The future is always uncertain, but we are confident in our ability to navigate it and look forward to a promising close to the year.

Thank you for your continued trust in Acuity Trading. Stay tuned for more updates and insights in the coming months.