A currency system that establishes a trading range that a currency’s exchange rate can float between. A currency band represents the price floor and ceiling within which the price of a given currency can trade, and is like a hybrid of a fixed exchange rate and a floating exchange rate. The currency band restricts how much the price can move relative to a reference currency or currencies.
My thesis for my master’s degree is on currency boards and it also covered Hong Kong, which uses a currency band. I have two SP accounts I’m following with my live account that rely on the currency bands of Hong Kong and China. The great thing about a currency band is that you know how much a currency can increase or decrease thus giving you an opportunity to make gains from volatility. It’s a simple idea and so far it’s really been working for me. The graphs for the two accounts will not be pretty, it’s a strategy that relies a lot on discipline, restraint and patience, not a high number of winning short term trades. However, what the strategy offers is reliability, predictability and relatively low risk. Please check out my two SP accounts and give my your thoughts:
so let me ask you, you are are somewhat ‘hedging’ fixed vs. float rates - trying to minimize the risk? Can you elaborate on your trading strategies? how do you think we should be following you?
The risk is already minimized - USD/CNH can change up to 1% compared to the rate set by the central bank. Knowing that CNH is greatly undervalued, trading is based on the idea that USD/CNH will decrease over time, and make a sharp fall once the currency band is increased to 1.5% or 2% which is expected soon.
Regarding, USD/HKD, the band is 7.75 to 7.80, meaning that the pair almost always trades within these 500 pips, meaning the win and loss per trade is limited. At the moment the rate is very close to the 7.75 level, which means it’s a good opportunity to buy.
Regarding following me, it’s up to every follower to calculate his own risk. It depends on the funds in the account, the other SPs followed and other factors. Personally, with my EUR 540 account I’m following my USD/CNH trades with 0.01 lots and my USD/HKD trades with 0.10 lots per trade.
Not bad I would say!
So, you distribute the 500 among all the trades.which are not many in a number…good good !!
I will have my eye on you, violet rose!
Violet Rose - closed one USD/HKD position at +6.6 pips, together with nice interest of 3.29. Waiting for a sharp increase in USD/CNH to open a sell position
Rainbow Rose - closed a total of three USD/CNH positions for +296 pips since the beginning of 2014, this month is going great!
Not planning to close anytime soon the old USD/CNH positions on both accounts. I’m open for questions and comments.
Oh I see. Why don’t you close Rainbow Rose? or you are waiting for something? What is your stop/loss level on it?
what will happen if the markets turn against you?
I’m also keeping two separate SP’s as they are following a little different trading strategies. Violet Rose is for USD/HKD, one old USD/CNH position and another USD/CNH position to be opened when I spot a nice opportunity (like a large upward movement in the pair). Rainbow Rose is for USD/CNH only, limits at around 100 pips, potentially has higher drawdown since there could be three open USD/CNH positions at the same time.
Regarding the markets turning, it seems very unlikely (unless the property bubble in China bursts). The highest upward movement over the past year has been only around 600 pips.
I can’t find a USD/CNH chart for the last years, so here’s a USD/CNY one since 2004, 10 year period. Steady decrease from 8.26 to 6.09, in pips it translates to over 20,000:
“CNH is an offshore version of the renminbi (RMB) created by the Hong Kong Monetary Authority and People’s Bank of China. CNY is the onshore version of the RMB.
CNH allows investors outside of mainland China to gain exposure to the RMB.
Short-term divergences between USD/CNH and USD/CNY can occur, but in the longer term the CNH correlates to the CNY.”
Violet Rose, closed two positions today on USD/HKD, total profit of 15.8 pips, plus 2.56 interest. Not sure now whether to open a buy or sell positions, if the pair remains at this level, I will probably think it over the weekend.
I know, I will as soon as I get some followers. Right now, it seems pointless as I’m my only follower.
Regarding trades, closed a trade for +5.4 pips, decided that the level is too high and opened two short positions. USD/CNH has been decreasing over the past days so I could open a sell position if it gets over 6.03.
Well, regardless, it is important to actually post some activity that you care about the followers and post your strategies, a chance for your audience to expand
just my two cents of thought
Im sure you have page views, and these page viewers, do read, regardless if they do not follow. Also, another way to attract the followers (except with your trading of course) is the official forum. I do read quite often providers’ threads there.
Well since I’m outside top 3,000 I guess most page views come from here. I have tried the official forum, but most posts there get about 10-20 views. I read providers’ threads there too, but I don’t think it’s such a good way to get followers. I put 2 posts in my thread there and it has only 84 views, compared to 426 views on my journal here. My theory is that the best way to attract followers is either through very risky and profitable trading to get a lot of pips fast (the reason why there are signal providers less than a month old in top 100 and it usually ends up bad) or consistent results over a large period of time, most followers (including me) do love to see SP’s with at least 20 weeks on their belt. Anyway, drifted away, the plan is to maybe put monthly reviews in my profile and zulutrade thread until I get a follower, then updates go live. I guess two or three more months of good results should get me a top 1,000 spot and some followers. I’m not looking for fast money here. My target for annual profits on each SP is around 3,000 pips.
3000 pips annually seems reasonable estimate. As for the risky fast strategies, come on, we all know its doesn’t work all the time, and not all the followers’ community actually like that. I think with time your trading, in case it is good, then followers will increase!
Oh, Violet Rose it is I like the profile and so gonna follow it
thank you for sharing! Most provider should spend time to communicate with us the followers!
Thank you
Update regarding trade, USD/HKD reached its highest level in six months, it’s really bugging me. USD/CNH is also on the rise. I will probably not open any new positions until Fed’s next policy meeting that ends on Jan 29.
stay tuned!
