Ahhh…I love the smell of money burning in the morning!!
I meant a nosebleed in the sense that it’s like getting punched in the face a few times when you watch it go up and down. Just when you think it’s over, it does it does it again.
Maybe a better analogy would be a bi-polar lover who doesn’t take her meds.
Hi Pipsquito,
I almost blew out my demo account on the run down but fortunately my much smaller real money account has been on the back burner and square for several weeks doing nothing.
I got to thinking. Figure out what your maximum downside is (well before the event) and buy GBPYEN put options to cover some or part of that exposure.
A “put” option is the right to sell a a specific price (strike) but not the obligation, conversely a “call” is the right to buy at a specific price (strike) but not the obligation. I believe it could be a better hedge for this type of the downside we have been witnessing recently. Options can be traded out prior to expiry as well. So for example buy one cash lot at 205.00 Find out the price (premium) and buy a 1 lot put with a strike at 205 say for mid September expiry. Premium is currently around 318,000 yen. If the market falls the option enables you to get out flat since the option will compensate almost exactly the amount lost in cutting the cash position. I am not suggesting that the option should be bought at the time of the cash position, but later when the risk comfort level gets uncomfortable and the market starts to look like a dive is possible.
I need to think some more about this and run the numbers in a clean demo account. Saxobank.com offer options as well as FX on their platform, but the demo is time limited to about a month I think. Other bookies must also have platforms that have options too. Options like leveraged FX carry their own risks, but in principal I think a combination of cash positions and options would negate a great part of the downside risk. If the market goes positive in the direction of profit, the option expires worthless and the premium is lost. Think of it as an insurance policy because that is effectively what it is.
Anybody out there with some experience in the Greeks?
Got to thank you pipsquito, you reminded me of something I try to live by. I really agree with this, but take it in a slightly different direction. I find people that try to deny emotion eventually crack under extreme enough pressure. I also try to use emotion as fuel, you’ll notice this in the greatest competitors of our time. Micheal Jordan would trash talk his opponents until they talked back and then he’d just go on fire scoring 50-60 points. Players quickly learned that it was better to be silent and let him score 30 points, than trash back and unleash the beast.
Many more examples but I won’t bore you all. Just wanted to say that having no emotion in my opinion is a dead end because once the pressure gets too high you crack and then the emotion that comes out, you have no idea how to deal with.
Thanks! Very good points…and yes, you are so right about the ill effects resulting from not allowing your emotions to be expressed. It is impossible to trade with no emotion as emotion is a part of human expression. Of course what people mean is not to allow rash decisions…but if you read “Blink” you will see how our subconscious mind often serves us really well in split second decisions…if it has been “trained” well.
When I use the term “emotion” I really mean the essence of human expression that is deeper than a rational “brain thinking” process. Traders seem to think that the further we get from that visceral state the better traders we will be. That is very true if that emotional state is filled with negative emotion of failure, fear, and anger. If you believe that all is well…and that nothing you do you can do wrong…then that emotion becomes positive and actually will spiritually guide you to make decisions that serve you well. Detailed stuff that also may bore everyone!! I do believe that Elijah practices a form of this philosophy…and that is what attracted me to this thread to begin with.
I may have blown an account and am well on my way to blowing another…but I recognize that that reality was created solely by me. What manifests in my world is entirely my responsibility.
Thanks for the post!
Don’t expect much from Japan until at least the middle of next week. This weekend marks the middle of O-bon week in Japan when Japanese take time off to visit the graves of their ancestors. After that you might see some action from this side.
My demo acct playing this strategy strictly went from $500k to 1.2 million in 9 weeks then would have blown in 2 days if I had not cashed it out … with $200k left. So I think it is nuts to say this is 100% profitable. Maybe, if you do what I suggested earlier: wait for it to collapse 1500-2000 pips, which she does every year or two, buy there with a firm stop. Add more on the way [I]up[/I], not down. Set stops to b/e & collect the interest as long as the trend lasts. Buy right in the first place. This method of buying a “loss leader” then buying on the way down, ‘hoping’ she will eventually come back … well, you could take the same money to Vegas and probably do better in the long run. :eek:
It’s like buying a stock that pays big dividends … if you buy it right in the first place, then you sit back and collect dividends for years as the stock creeps upward. But you have a stop in place just in case.
If you bought the stock as a penny stock and it goes to $200 in 10 years AND it pays a dividend, you were smart. If you bought it at $200 and it goes to $1, it could pay dividends all day long … you still lose.
FWIW Jeb of the complicated charts says she will retrace to 207, he is telling his students to wait for the retracement, then go short.
[I]Originally Posted by cuero
Just wondering if anyone here has experience in using fx options to either cover their LL or their average longs when the market looks like selling off. The options premium might look cheap against one of these long runs. Trouble with FX options is that they are European style and you can only exercise on the day you buy it for compared with American style which is any time in between purchase and expiry. Thoughts anyone?[/I]
:eek: that sounds like low probabilty to me if you have to wait for the exact day to cash out your option. Options in any case are only profitable in the long run if you are using hedging strategies with the options themselves (imo), using an option to hedge a trade, you can lose both ways due to time decay. Since fx allows you to hedge any trade (which you can’t do with equities) I would stick to doing it that way, no worries about time.
I’m back…
Thanks cuero for the options stuff at Saxobank. I have asked a few times around Babypips about options and who offers them with no answers. I didn’t know you would have to exercise the contract on the same day though. That’s a bummer.
Todd, my strat is in the systems room like this thread. It’s called:
“M2P Contra-Swing Strategy”
It’s not 100% profitable like this Elija’s though. But may be more your style. And yes, the math is right, Elija’s strategy is 100% profitable. It all comes down to mm and time. It’s the forever unknown that is the killer with this.
Your’e guaranteed a profit, you are not guaranteed on how much time and drawdown you will have to endure to get it.
4xstar,
The differenc between trading the guppy for interest and getting dividends on a penny stock is the following:
England will always be England, The country is not going anywhere. If it does vanish, well we have a lot more to worry about than money.
A penny stock doesn’t guarantee dividends, nor probably pays them because only blue chips pay dividends… and… a penny stock can vanish and not even make the third page of the NY Times.
Just want to clarify. The option can be reversed at any time since the markets are constantly repriced all day long. So If your underwater cash position starts to recover into the comfort zone then you can reverse out the option by taking the other side at the new price and leave yourself flat. Allowing it to expire is also an alternative. The fact that European options can only be executed on the day need not be such a hindrance. Something else that needs to be checked is the cutoff time. Usually options have either a London cut, or a New York cut meaning that the official fixing time in that market is the price the option is compared to. I still think some scenarios have merit here. Going to find a new demo account that offers options.
You know it is refreshing to hear someone say that emotion in trading is a positive thing … all over the boards all you hear is “control your emotions, you must trade like a machine”. Well you have to trade in a disciplined manner, but like the Arabic proverb, “trust in God, but tie your camel”, stay grounded in this reality but do not discount the effect, the power, of other realities … which most certainly surround us.
(Queue the Twilight Zone music…
)
Then how can it be called a profit??? If you keep throwing money at your account but the pair you are trading eventually goes to zero …all the interest in the world cannot make up for the lost value. It can only be a profit if you buy right in the beginning … and have stops in place. There is nothing that guarantees the GY cannot go to 50, …or 10.:eek:
I’m talking about stocks like TASR that started as penny stocks and went to $200 and now trade at $7.
And “England will always be England”?? I take it you haven’t heard of the NAP … the North American Peso, aka the former British pound 
America will always be America … except owned by the Chinese.
The times, they are a changin’ :eek:
Let us know how it works out … for me it would be adding in a layer of complication, but that’s just me.
Well, there’s alway the Republic of Texas if needed.
You know how we think. The Chinese can own anything they want up to my property line.
You ever wonder why there are no reports of looting after a hurrican here?
And China is going to bubble. The only thing pushing their economy is new jobs from exporting cheap labor. That’s not a foundation for continued success. That’s a blue print on how to blow up a balloon until it pops.
Ok, your post could make me go on for a week or more but I will end it here. I’m sure Elijah will jump in too unless he is able to control the urge not to go off.
I think we will have to reserve “North American Peso” for the greenback since it is rapidly going there. For “The pound in your pocket that will never change” we can reserve the “North Atlantic Peso” … and of course you all know the yen is known as “Bill and Ben” (After the flowerpot men).
YouTube - ATV - “Bill & Ben The Flower Pot Men”
Hey, my daughter is an Aggie, that makes me an honorary Texan. We also have family in Houston & Austin, so I know how Texas thinks … and it may end up being the only “country” left when the smoke clears…
although Elijah probably would argue that his ‘Commonwealth of VA’ would survive as well
Anyway, back to the guppy … she is bouncing off an ascending trendline on the 15’, Jeb is calling for a retracement to 207.81 or as far as 209.
207.05 is a fib pivot line (automatically drawn on my chart), we have a weekly s2 and s1 at 206.93 and 208.39, so there is probability that she could retrace to that area. I am long at the moment from that last swing low at 204.60 but will be looking to bail and possibly reverse if she gets anywhere near 207.
Sorry … that’s what I mean, the North [I]Atlantic[/I] Peso
The US will have the Amero … :eek:
UJ looks ready to break out … could pull the GY with it ??