For the past two weeks, US dollar has surprised us with its great rally. I think one of the major reason for the rally is falling oil price. Another is that other countries seem to be in bad economy condition as well. So when the whole world is in trouble, the investment community always favours US.
I do not think this US dollar rally is sustainable. Some of my readers had asked me when this rally will end. I do not want to make guesses as this can be damaging in my trading. I prefer to react only when the charts tell me so.
If US dollar continue to be strong, I will be interested to buy USDJPY.
If US dollar cools down, I will be interested to short USDCHF or USDCAD or Silver.
Besides the US crosses, I will be interested to short EURJPY on rebound. It had been easy money to borrow JPY to buy EUR for the past 7 years, but I think this trade has gone too far. I am making a BOLD prediction that we will not see EURJPY rising above the peak of 170 for the next 3 months.
Currently I had long position in EURGBP, reason being both Europe and UK economies are weak, I see no reason for EURGBP to breakout of its sideway trading.
I think the bigger picture involves the expectation that US interest rates will rise in the future, while foreign interest rates, including EUR, GBP, AUD, CAD will all fall. It’s becoming more apparent that the economic slowdown is going international and it seems there is a “first in first out” theory attached to that. And the US was the first in by awhile. I think if the US starts putting out some positive economic data, it’ll fuel the fire for a much longer term rally.
Sad to hear you got burned by having no risk control. How unexpected. It’s not the 20% Loss that gets you, it’s the 25% gain you have to make, just to get back to where you were at the beginning of this week.
Personally I’m staying away from the USD next week at all costs… I lost over 20% of my account this week because of this unexpected rally. Yarcofin
Yarcofin, I had two buddies who also lost a huge chunk of their accounts Thursday night/early morning. Neither one of them was using S/L’s. they both thought they were seeing gbp/usd and eur/usd at bargain prices and went long w/o S/L’s. Retracement bargain hunting is definitely one of the key elements of my trading, but to do it against the trend without a safety net is suicide. I’m not an expert, but two pieces of advice will take you a long way…1) THE TREND IS YOUR FRIEND 2) ALWAYS USE A STOP LOSS. Anyway, just my two cents!! Happy trading to all!! Pipbull!
Nothing is impossible to him that will try. Alexander The Great.
Akea,
Its not the world slowing down you can only grow so much. I have friends in Finland who shop in the US because its cheaper. The demand for oil is a major factor now for the first time since the 70’s we as a country, have had an almost permanent decrease of demand for oil. Less money going out the more money able to circulate the higher the confidence. A 3% decrease on a 4.2 billion dollar a day business is a huge impact. The US will not rise above forecast I feel until next year. Is long as the US decreases its spending in exports the dollar should rise giving no major casualties to trade.
As for the Yaracofin comment. I dont think it was risk control I think its was successive losses. He posted a large ROI for 2 weeks on his own trading account. To state its lack of risk control is a little early when you dont know the full details. I really am impressed with his trading most people I know average 5% their first month.
The point is that if these high interest rate countries have no reason to keep their interest rates up, especially with signs of slowing economies and dropping oil prices, then they have nowhere to go but down. Some of these currencies have seen huge run-ups, especially the EUR and AUD, and if the expectation is that they will start cutting their rates, then there is likely to be an overall unwinding of these positions, especially if USD data is looking more favourable.
As for Mr. Yarcofin, he doesn’t believe in stop losses. His trades were perfectly valid on sunday if you were looking for a bounce up, but without any form of risk control, he lost a lot of money on a few trades.
Once again I find it extremely hilarious seeing this
incredibly unwinning trader critizing Yarcofin.
And the so called losses came on his terms because
he chose to close out the trade himself rather than
having it stopped out like all of your losing trades.
Please, losers should stop crticizing winning
traders much less offer any advice to them.
Of course it is not luck duke. I have a system in my FX trading.
The key word for my trading strategy is back-testing. If back-testing result shows that this indicator has proven to be successful and profitable, I will be interested to use this indicator in my trading.
Previously I have done back-testing based on 2 years period. I had used the indicators for my trading and this system had helped me to double my account balance. But the success rate has fallen for the past few weeeks, so I decide to improve my system.
This time I had done back-testing based on 1 year period as well. I will enter a trade only when both 1 year indicator and 2 year indicator are pointing in the same signal (buy or sell).
Currencies Pairs : Indicator for 1 year / Indicator for 2 year
USDJPY : Parabolic / MACD
USDCHF : Stochastics / Stochastics
USDCAD : Comm Channel / Parabolic
AUDUSD : Bollinger / Bollinger
EURGBP : Stochastics / Comm Channel
NZDUSD :Comm Channel / Bollinger
I had only done my testing on currencies pairs that have spreads of 4 pips or less. If you are interested to ask me to do testing for other currency pairs, send an email to me at <[email protected]>.
if your system indicated a rebound that different. To say I think its should bounce back is bull. Analyst guess it. Systems and markets tell it. I was wrong then if you system told you. I was right if you hoped it would. I am no down playing your system just the idea that …oh it has to go back up to normal.
I wasnt recommending anything there is alot of new traders that would trade on peoples advice. Say it [U]should[/U] go up is a guess. Say my system says it will go up is different.
I believe that for a trader to succeed in the long term, he has to build a good system. When the trading environment changes, modified the system to suit the environment.
Another reason why I use system to trade is because I am lazy. Everyday I just use my system to check on the currency pairs, then I place my working order.
Of course fundamental analysis must play a part as well. But I believe in my system more, because it has proven itself to be a trustable system.
Currently my system has signaled sell for EURJPY and Silver, so I had placed my working order to sell on rebound.