Argentina is a country that has never provided its traders with a serene or foreseeable environment and in most ways, the turbulence has become the training ground itself. This has forced traders working within the country to have an instinct that their colleagues in more stable economies hardly need to have, as they have learnt to interpret political signals, central bank announcements, and inflation statements as attentively as any technical chart. The instability that scares away newcomers is to the experienced participants the opportunity itself. Knowing how to ride those swings and not to avoid them has become the ability that distinguishes serious players on the market in the region.
One of the discussed risk management techniques has been position sizing among the Argentine traders who are involved in forex trading. Instead of investing huge amounts of capital in any one trade when uncertainty is at its highest point, the experienced members like to operate in smaller, more calculated steps. One who dealt in Rosario and had years of experience in losing money in oversized positions once explained the change of thinking as learning to drive on ice. It is the instinct to press the pedal to the floor, but the trick is to know when to lighten up and allow the car to stabilize. Such recalibration, which is done with capital allocation, has kept numerous traders in the game long enough to become true professionals.
There has been an increasing interest in options strategies among traders who would like to enjoy some volatility without subjecting themselves to directional risk. Straddles and strangles, a kind of position that involves having both a call and a put at the same time, are generally good when there is a large price movement anticipated but the direction is not yet determined. These instruments have been especially helpful to Argentine traders who have been monitoring the peso during budget announcements or deadlines with IMF negotiations, as it is certain to cause sharp movements and the result is almost impossible to predict in advance. The strategy does not need to be correct in direction. It must be correct in regards to the magnitude of the move.
Rules-based and algorithmic strategies have also become popular with a portion of the trading community that became weary of making emotionally-pressured decisions. Whenever the markets are flying as high as they occasionally fly in Argentina, the human psyche is inclined to go against good judgment. There is a multiplied effect of fear and greed and sometimes months of hard work can be ruined in one session. Other traders have reacted by developing or adopting automated systems that make trades according to preset conditions, eliminating the moment-to-moment decision-making which causes so much psychological harm during volatile times. Such systems are not infallible, but they bring some form of consistency that pure discretionary trading finds very difficult to preserve when news headlines are falling by the hour.
Analysis of correlation between the Argentine peso and the prices of commodities, especially the soybean and other agricultural exports, has provided some traders with a handy forecasting instrument. Since agricultural exports constitute a large part of the foreign currency earnings of Argentina, fluctuations in the world commodity market usually predict the strain on the local currency. Those traders that keep an eye on such relationships have developed early-warning systems based on publicly available information, and by tracking these movements in grain prices they will place themselves in a better position than the rest of the market. This type of cross-market thinking takes time and research and rewards those who invest the effort in it with an informational advantage.
The role of community in the spread of these strategies has been underestimated. Informally organized WhatsApp groups, Telegram channels, and weekend gatherings in Buenos Aires have turned into the places where traders exchange observations, discuss strategies, and blame each other for poor choices. A popular club in the capital established the habit of discussing together losing trades and not looking at them as something to be ashamed of but as information to be analyzed. Such a culture of sincere reflection, coupled with the communal urgency of working in such a challenging setting, has helped many players in those settings to learn faster than any systematic course would have done. To the interested parties, the community has been integrated into the strategy of those who are dedicated to forex trading in one of the most challenging currency environments in the world.
