Tuesday, September 2, 2008

Dollar Bulls to Own the Earth? --IFCN Wk 39 -Tue- Equity: $1,003.55

If the Euro and Pound continue to fall at their current rates, it wouldn't take long. As all of us know, currency speculation and exchange is accomplished on margin. Trends like we've seen recently can make a well-placed $10,000 investment in the dollar a $2 million bet with 200:1 leverage. Overdo your risk and you can lose in an hour what you made in month by rational trading.

I think a few too many specs out there are counting their profits a bit early, but that's how markets facilitate trade. They give everyone what they want, just at different times and prices than they originally expected.

Everyone has too much position size on when they take their most surprising loss.


Now we have been stopped out of three of the week's FirstStrike trades. Only the short Eur/Usd and the short Gbp/Jpy are still in play.

This week's FirstStrike entries:
  • Eur/Usd: Short @ 1.4584, stop 1.4644. Trade still in progress.
  • Gbp/Jpy: Short @ 194.93, stop 195.83. Trade still in progress.
  • Gbp/Usd: Long @ 1.8080, stopped out at 1.8020.
  • Usd/Chf: Short @ 1.0979, stopped out at 1.1039.
  • Usd/Jpy: Short @ 108.03, stopped out at 108.63.
Any FirstStrike trade not stopped out before Friday-- exits on Friday just before 15:00 CST.

I have a feeling we're going to have two more losses by the end of the week. When markets get hammered as hard as the ones we've been following, volatility increases and makes it difficult for the markets to reverse or go forward. Then you see volatility with no direction for longer than you might like.

Current equity is $1,003.55.

Joel Rensink


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1 comment:

The Archiphage said...

I am sorely tempted to go ahead and close out the 3 profitable positions I have remaining... but I won't. (I'm actually short GBP because of that 1hr difference in open times.) Things can still get pushed even further or at least stay in the green until Friday... even though I think a violent snapback is pretty likely. I get wary when the trade looks too obvious.