Saturday, May 17, 2008

Hope Kills!-- IFCN Wk 23 -Fri- Equity: $734.36

There is no hope.  There is only price.

The pound dropped to a three-month low against the dollar this week as the negativity about the UK economy deepened.

I think people lack perspective! 65 years ago, the populace would have been happy to sell their souls for the economy they have now.

Informational reports in the UK this week showed that retail sales fell in April, and other indicators of inflation were clear that the government's concept of inflation rose from 2.5% in March to 3.0% in April. Laughably, the Bank of England's target for inflation is 2 per cent and expects everyone to believe it when prices have been spiraling out of control for years.

Of course, the US has been doing this for decades too, the old bait and switch. They've been changing out rising-priced items they review for inflation statistics so that pretty soon they will be gauging whether we have inflation by the cost of water due to rain and used pocket combs. You wouldn't actually expect them to guage real inflation by what life really costs their governed, would you?

News of rising price pressure dashed any ideas that the central bank might cut interest rates by 25 basis points to 4.75 per cent at its June meeting.

“We do not expect reduced expectations for rate cuts to benefit the pound and believe that the downside risks for sterling have risen,” said David Woo, of Barclays Capital. “The combination of tight credit and lower disposable income brought about by high inflation means that household consumption is becoming more vulnerable.”

This talk about finance news is included to show how little the governing and the governed understand about market movements and the why of what moves when.

I have two answers. The first is expediency.

Everyone is trying to keep their jobs. They do and say what they have to – to keep their jobs and some bit of place in the world.

The other answer is overuse of HOPE. Hope, used as a solution-- kills.

Governments. Dreams. And ultimately, the people governed--- due to actions predicated on mistaken assumptions and misplaced trust.

Inflation is a normal process tied to fiat currencies.

There are consequences to them that you and governments are aware of. But they can affect your life only to the degree you let them.

Do you remember a class in school where they studied and taught you about inflation? They taught you about “stranger-danger!” and “don't take candy from strangers”..., but the greatest theft device known to man got no play in the classroom.

There is no ultimate security in imaginary money based on “good faith” of the issuers. Especially when the issuers not only have little real faith. They have their own agendas, which doesn't include making sure you have a fine retirement in a cabin by the sea.

A palace by the sea might be their own personal agenda, but they intend to do it with YOUR money.

Don't trust the news or what conclusions the media offers due to the “news”. Distrust all of it.

Trust price. At least to a greater degree. Your profits are directly tied to the last tick seen.

We had a pretty good week when you consider how violently choppy it was to active traders.

After losing on 4 of our 5 FirstStrike trades, the long Gbp/Jpy trade helped out by mitigating the losses of the other trades. It is interesting that the last two weeks profits all came from the one pair which I have seen be the most obstinate over time.

Here is the recap of our trading week--

The data below is as of Friday's close, May 16, 2008:

No OneNightStand trades were executed on Friday.

Start of week equity: $741.65

OneNightStand Exit on 05/12/08:
Gbp/Usd: short on Friday @ 1.9501, exited at 1.9480 for a total trade profit of 21 pips

Completed FirstStrike trades this week:
  • Eur/Usd: long @ 1.5463, stopped out @ 1.5403 for a 60 pip loss.
  • Gbp/Jpy: long @ 202.11, Friday exit @ 203.55 for a 144 pip profit.
  • Gbp/Usd: long @ 1.9531, stopped out @ 1.9471 for a 60 pip loss.
  • Usd/Chf: short @ 1.0423, stopped out @ 1.0483 for 60 pip loss.
  • Usd/Jpy: long @ 103.87, stopped out @ 103.27 for a 60 pip loss.

Total losses: 240 pips
Total profits: 144 pips
Net loss: 96 pips

OneNightStand 05/16/08 entry(s):

Unrealized Losses:          -0-
End of week equity: $734.36 (includes unrealized P&L)
Total Loss for Week: $   7.29 (1.0% weekly decrease)

It was a decent week, with the conflicting news and few good trades. As always, there is next week to look forward to.

Have a pleasant weekend---

Joel Rensink

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