Friday, May 9, 2008

pssst!! Buy the Dollar!-- IFCN Wk 22 -Fri- Equity: $741.65

As most of the current readers of this site are aware, I have been critical of the excessive value of the Euro currency. It looks like others have begun adopting the same view.

Jim Rogers, a long-time bear on the U.S. dollar (USD) believes the currency is finally oversold.

Jim Rogers, chairman of Rogers Holdings, said in a Bloomberg article, “Too many investors are bearish on the U.S. dollar and the currency will have a 'nice' rally.”

Rogers co-founded the Quantum fund with George Soros in the 1970s and correctly predicted the start of the commodities boom in 1999.

"I expect a nice rally in the American dollar because so many have been bearish on the American dollar including me," Rogers said at the launch of the Barclays Global Agriculture Delta Fund in Singapore today. "America is also a huge producer of agriculture and if I'm right about agriculture prices, which I think will go up a lot, that's going to help America compared to those countries which don't have agriculture."

Rogers said in an interview late in April that he was hoping the dollar rally would last a year, which would make it possible for him to unload all of his U.S. currency. He is a big believer in the currencies of commodity producing nations, such as Australia, New Zealand and Canada.

He also expects U.S. Treasuries to decline due to increasing inflationary pressures. “I have sold long-term U.S. government bonds,'' Rogers said. ``If the same thing happens as it always happens in inflationary times, then rates are going much, much higher, especially long- term rates.''

Rogers also pointed out the fact that central banks can be good at affecting short-term interest rates, but they can't do very much with longer term rates.

Since Mr. Rogers is a trading realist and not primarily a broker, and places huge market positions when real conditions change – taking note of his present stance is prudent. He has enough resources, informational and monetary - to be correct when it matters.

About our strangely profitable week.

After losing on 4 of our 5 FirstStrike trades, the short Gbp/Jpy trade saved the week by exploiting the pair's huge drop! The 608 pip profit overwhelmed the other losses and added solid profits to the week's trading!

It is another example of the efficacy of a trading method which takes numerous small losses but holds profits for as long as practical. Methods which do this can be simple, but need to trade at favorable times to gain a great advantage.

Here is the recap of our trading week--

The data below is as of Friday's close, May 9, 2008:

We had only one OneNightStand trade executed on Friday. Details follow-

Start of week equity: $711.60

OneNightStand Exit(s) on 05/05/08:
Usd/Chf: long on Friday @ 1.0510, exited at 1.0541 for a total trade profit of 31 pips
Usd/Jpy: long on Friday @ 104.91, exited at 1.5.21 for a total trade profit of 30 pips

Completed FirstStrike trades this week:
Eur/Usd: long @ 1.5508, stopped out @ 1.5448 for a 60 pip loss.
Gbp/Jpy: short @ 207.09, Friday exit @ 201.01 for a 608 pip profit.
Gbp/Usd: short @ 1.9706, stopped out @ 1.9766 for a 60 pip loss.
Usd/Chf: long @ 1.0592, stopped out at 1.0532 for 60 pip loss.
Usd/Jpy: short @ 104.69, stopped out @ 105.29 for a 60 pip loss.

Total losses: 240 pips
Total profits: 608 pips
Net gain:       368 pips

OneNightStand 05/09/08 entry:
Gbp/Usd:  short @ 195.01, stop @196.01.
The stoploss order for the short Gbp/Usd did not get hit on Friday, so we will exit the trade on Monday morning @ 00:01 CST.
Unrealized loss on ONS trade @ Friday close: 44 pips.

Unrealized Losses:       $ 3.25
End of week equity: $ 741.65 (includes unrealized P&L)
Total Gain for Week: $ 30.05 (4.2% weekly increase)

It was a great week, considering one relatively small trade did the heavy lifting!

Looking forward to next week.

Wishing you a pleasant weekend---

Joel Rensink

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