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Some misconceptions hampering your US Dollar / Currency Trades

Random chatter which keeps coming back to me, mostly should be a list for your morning am start..Unfortunately Treasuries have not started rising, QE3 is not a reality honestly and there is no money to be made without spending. What goes up must come down, like the employment statistics from BLS, to be cut by a 48,000 couriers alone next month. at 8.5% unemployment, we have probably achieved annual targets at some houses..

Praying for Recovery ain’t a good trading mind

And praying for destruction may be good Guns n Roses/ Nirvana but not good money, unlikely to help you. Hedge funds lost 5% on average in 2011 both ways. Your  stated position is  a new experiment for the market. Your prayers are no longer feed for the carrion seeing it all falling from the skies..

The Charts can speak both ways

Except for strong trend reversals that do not happen more than once in a year of trading or less, most reversals in trade speak are not trusted indicators of anything. However they are always that mite safer than listening to noise like The Euro won’t survive or the Euro will survive 2012. more flows depend on a 45-day /60-day lag thankfully but on a trend reversal, it is you who discover it, so a tendency to call a trend change twice in the same week, becomes a malady not restricted to policy makers alone.

The Euro, it won’t be a bottomless pit

The Euro has survived a lot of bad days in the last 6 weeks to come to 1.28 levels. It is not going under in a hurry irrespective of whether Christine Lagarde manages to makes sense on its recovery or not. It is just in too many stable portfolios, too few interested in a war with the Dollar and too many have survived a high interest rate regime during restructuring according to IMF sponsored Economics itself, with or without the money.

Don’t depend on Oil and Gold to be rational

Dollar’s strength, again repeated for a short period with a corresponding falling off in commodities did not last more than a month. One Iran call for aggression and Oil’s in fact jumped another 6% on today itself. POil’s buoyancy is going to last 2 months. Andnow Gold will be up during the period irrespective of a weak or strong dollar But in two months, there could be more bears in them as suddenyly as this reversal in commodities shut down.

Find the flows and stay with them. For example, most traders are now waiting in metals trades for China to start buying. With or without LME holdings becoming too big for CFTC regulation to not change in the US or LME in the UK< it still matters who is buying and who is selling and how much. without that, do not jump in.

As I said trends stay one way once reversals are made and right now it could all the middle of the way changes in both directions because the strong change has already happened. Everyone knows 2012 is not going to be too rosy hence the optimism that is all each statistic is giving you

 

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One comment on “Some misconceptions hampering your US Dollar / Currency Trades

  1. Pingback: USDEUR / FXE: “That’s a good plan!” | The Banking and Strategy Initiative

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