/ Market Report / By

December Market Report

December 2024

Market Report

As we close the book on a turbulent November, December kicked off at a much calmer pace. The USD’s recent rally hit a temporary pause but regained momentum following the Federal Reserve’s hawkish rate cut on December 18th. A handful of our subsystems maintained long-term USD short positions, leading to a slightly higher drawdown with modest losses spread across several strategies. This outcome aligns with our projections from last month’s report, where we emphasized reduced exposure and a shift back to medium-term volatility norms.

It’s important to note that market recovery doesn’t follow a predictable timeline. In systematic trading, the idea that losses are immediately followed by rebounds is a myth. Our approach deliberately avoids “revenge trading” aimed at rapid recovery, focusing instead on achieving steady, sustainable performance over time. Even the best systems experience occasional underperformance—these periods are a necessary part of maintaining long-term alpha and avoiding the pitfalls of strategy over-optimization.

Currently, a few subsystems are holding medium-sized USD short positions, particularly in AUDUSD, NZDUSD, and USDCAD. After sustained volatility in these pairs, we anticipate some short-term USD fatigue from a technical perspective, which should help reduce pressure on portfolios. Beyond these positions, most subsystems are performing steadily within expected parameters.

As we approach the holiday season, liquidity tends to decline, particularly from mid-December through the second week of January. During these periods, our systems intentionally scale back trading activity to minimize exposure to abrupt market movements unanchored by fundamental factors. While December’s performance may remain subdued, this cautious approach ensures stability in less predictable conditions.

Looking ahead to the new year, we anticipate market conditions to stabilize post-election, allowing our systems to operate at peak efficiency. Challenging periods like this winter offer valuable insights, helping us refine and enhance our strategies. With several key updates launching in January, we’re positioned to leverage our robust data foundation and deliver exceptional returns in 2025.

Roadmap

Here’s a snapshot of the exciting developments on our roadmap:

  • Trade Aggregator Rollout: A new module designed to lower minimum balance requirements for large-scale institutional systems.
  • Infrastructure Expansion: Adding capacity to support more trading terminals and subsystems, enhancing diversification.
  • Genetic Search Engine Deployment: Optimizing non-averaging strategies to reduce correlation and expand asset coverage.
  • Enhanced Liquidity Access: Adding new liquidity providers across brokers to maintain premium trading conditions, enabling larger capital allocations.

As we step into the new year, these enhancements will further strengthen our systems, ensuring resilience and adaptability in an ever-evolving market landscape.