Discretionary Trading Q1 2020 commentary

SaxoSelect Commentaries
Saxo Bank

Instruments traded
FX spot and CFDs
Asset classesFX, equity indices, commodities, government bonds
Investment styleDiscretionary (non-systematic), volatility, opportunistic
Quarterly return+15.9% (after trading costs but before any management and performance fees)
Annualised return volatility (since inception)35%
Average trades per week13

Market overview

It has been an historic quarter. Markets started the year overextended and there was complacency in muted volatility and signs of froth in some speculative activity. Then the coronavirus outbreak in China hit, but initially, though the risk of a pandemic was high and the outbreak was taking place in a country systemically important to global commerce, markets continued to go up. At this point however, the Discretionary Trading strategy started trading less aggressively.  

After the outbreaks in Italy and South Korea, it became clear that the world was facing a developing pandemic. This event, coupled with the possibility that Bernie Sanders might be the Democratic nominee, spooked markets at the end of February. March brought real earthquakes in the markets and it became a fight between unravelling financial markets, collapsing economies and unprecedented policy response by central banks and governments. It was the fastest bear market in history, with mind-boggling intraday volatility. 

Portfolio performance

Since inception (29.12.2010)

(Returns include transaction costs but are before service and performance fees.)

Volatility is beneficial for the strategy and as a result, performance has been good. However, the extreme volatility witnessed in March was a double-edged sword, as the strategy is constrained by stop loss and limited permitted loss on any given position. The focus in March was to protect capital, limit the size of positions, avoid being harmed by volatility and profit from opportunities. Timing-wise, there were some good decisions.


Ultimately, after the earthquake, its consequences and aftershock, comes the recovery. Though it will be very complex, it will also be good for trading as we navigate along the epidemic curve and the long-lasting economic consequences.  Some volatility is to be expected, as there is no going back to the muted environment of the past. The extreme volatility phase is probably behind us, but there should be consistent opportunities in equities, currencies, commodities and bonds. 


Any information found in this document, including performance information and statistics are subject to change. You can find the latest updated pricing information on the description page for each available portfolio. In providing this material Saxo Bank has not taken into account any particular recipient’s investment objectives, special investment goals, financial situation, and specific needs and demands and nothing herein is intended as a recommendation for any recipient to invest or divest in a particular manner and Saxo Bank assumes no liability for any recipient sustaining a loss from trading in accordance with a perceived recommendation. All investments entail a risk and may result in both profits and losses, and all capital is at risk. In particular investments in leveraged products, such as but not limited to foreign exchange, derivatives and commodities can be very speculative and profits and losses may fluctuate both violently and rapidly. Speculative trading is not suitable for all investors and all recipients should carefully consider their financial situation and consult financial advisors in order to understand the risks involved and ensure the suitability of their situation prior to making any investment, divestment or entering into any transaction. Any mentioning herein, if any, of any risk may not be, and should not be considered to be, neither a comprehensive disclosure of risks nor a comprehensive description of such risks. Any expression of opinion may not reflect the opinion of Saxo Bank and all expressions of opinion are subject to change without notice (neither prior nor subsequent).

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