Pound Pounded to 21-Month Low!--IFCN Wk 36 -Mon- Equity: $835.63.

The pound slid to its lowest level in almost 21 months against the dollar after a vaunted report indicated that the current credit squeeze brought the real estate market to a "virtual standstill".

Banks have curbed lending as they handle outright losses and writedowns due to fallout from the troublesome U.S. subprime-mortgage market where Britain has held assets. Inflation concerns are all the buzz after a report showed Britain's inflation increased to 4.4 percent in July, more than double the central bank's 2 percent target.

After the report, a Michael Metcalfe, the head of macro-strategy at State Street Global Markets, London; said that investors should sell the pound versus the dollar. “The pound is still being swept along by a broader dollar move.''

Whenever the media offers direct advice in print, the featured move is likely to take a breather for a day or so. Maybe the pound and Euro will give us a small rally to sell. Thanks Michael!

The British pound has lost 4.8 percent against the dollar in just the past month. It certainly is looking like we have a durable trend beginning for the dollar.

-----

I promised a few more excerpts from the readers who reaped rewards from taking the FirstStrike and OneNightStand trades last week. (thanks again to those who shared their experiences)

Hello Joel!

Yes, it sure was a great week in the Challenge account. I'm at a new equity high as well, up something like 50% on the week, not yet counting the ONS trades. I think my position sizing is considerably more aggressive than most people recommend. We'll see how well I can stick to that when the amount in that account grows to a sum that actually means something to me. (I predict I'll do fine.)

I notice you're weighting your entries differently based on which direction you favor in each pair. I'm going to start thinking about how to do that myself. I've been using the same size on both orders in each pair all along. It works, but what you do will obviously work better if I'm at least better than chance at picking the direction. Maybe you could put a star next to the order you're weighting more heavily when you send the orders each week.

Now, as to the results, my trades were as follows:

1. GBP/USD: short @ 1.9686 exited Friday @ 1.9220 for a 466 pip gain
2. USD/JPY: long @ 108.20 exited Friday @ 110.26 for a 206 pip gain
3. EUR/USD: short @ 1.5539 exited Friday @ 1.5007 for a 532 pip gain
4. USD/CHF: long @ 105.20 exited Friday @ 1.0819 for a 299 pip gain
5. GBP/JPY: short @ 211.76 stopped out @ 212.66 for a 90 pip loss

Net gain: 1,413 pips

My ONS entries are the same as yours.

I can't imagine taking profits early using a system like this. How would you ever make up the losses without holding out for gains like this? If I recall correctly, we had something like 6 straight weeks of losses, and some of those weeks were worse for me than they were for you because of reverse trades you took. Once my orders are all triggered and the opposite orders canceled, I basically just don't look in the Challenge subaccount until Friday. Speaking of canceled orders... I hope Oanda will implement an OCO function soon. It sure would make my trading life easier since I use the bracketing idea for 2 other systems I trade in addition to F/S.

-Xxxxx

----------

Since you asked in your blog for our trading experiences this week, here's mine.

I don't usually take your FS trades. This week I took my trades in swissy based on daily volatility breakout, and had a great week!

I did, however, take all of the ONS trades as usual. Finally, a great week! I'm well over 300 pips in total profits so far and we'll see what Sunday night will bring.

-Xxxxx

----------

Yes, it has been a very good week’s trading. I started trading the two Infiniteyield Forex Challenge systems on the 21st May and was down from GBP 5,000 to 3,453 so it had been a slippery slope up to the beginning of the week. Now my total equity (including open ONS positions) is over GBP 4,600... Very nice when it happens!

As you know, I am based in London so I take the trades around 5-6 hours before you though exit at the same time on Friday’s (I am not a good morning person). Generally I do not monitor my trades very closely once all the OCO orders have been sorted out. On Thursday evening I was pleasantly surprised by the First Strike action and entered my ONS orders – 3 of them were entered within an hour or two before I went to bed! I next checked the positions at 5.00pm on Friday afternoon and was showing a 38% profit... I exited the trades at 20:35 as I was still at work and wanted to leave for home – I thought the position wouldn’t change that much and may get worse rather than better. Overall that proved a reasonable assumption.

Due to my slightly different opening price time, I had 3 profitable trades and they were:

GBP/USD---USD/CHF---USD/JPY

For a total of 884 pips profit. Nice.

The ONS trades are looking good too – just going to be difficult to know whether to exit earlier or wait until midnight when I enter my First Strike orders.

I think that because I have a full time job and cannot always watch my trades it makes it easier for me to follow the system. In some ways it is easier too as you don’t have to agonise on when to exit – you just follow your system at the preset times.

My original plan was to increase my equity from GBP 5,000 to 50,000 after the first 3 months but I didn’t as I was so far underwater. I would have made serious profits had I done that but waiting was still the best plan. I want to be in this for the long haul and the big profits can wait. I now feel I can really make a go of this and become a full time trader.

I’m glad the week was good for you too. Your money management looks impressive and I keep on trying to guess how you do it!

-Xxxxx

----------

Hi,

I took the ONS and FS (both ways) trades and despite my poor execution, my returns are great. I mistakenly thought that the entry for ONS would be different if it came in at the 10 day low. By the time, I sorted it out and put market orders in, I missed out on 30 pips or so.

Thank you.

A. Xxxxx

-----------------------------------------------------

Note: This is a particularly valuable lesson displayed above. Executing despite making a mistake is the correct thing to do. Make sure you have the trade on. If you have to adjust your position size downward to facilitate the error - do it. Taking risk-adjusted trades is what succeeds, nothing else. ----JR----

-----------------------------------------------------

Joel,

I wanted to let you know that I did take all the trades and held on to them by the rules and boy am I glad I did.

It sure did take the sting off of the drawdown we were experiencing.

Thank you for what you are doing

Xxxxx

----

Thank you all for your responses. I'm sorry there wasn't more room for all of the ones I received, but I appreciate the time and details you were able to relate.

Trading correctly starts with your own mental preparedness. If one has the correct outlook and perception of the task, it is much easier to accomplish it.

Joel Rensink

www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

The Dollar's Herculean Strength Continues! --IFCN Wk 36 -Mon- Equity: $835.63.

The forex world is running for cover again this week from the new dollar bulls. Traders who just weeks ago thought the dollar was finished and would never recover are frantically buying the dollar as if it is the last game in town.

It isn't. But it might feel that way if you were short any sizable amount.

This morning I had the pleasure to exit the ONS trades from last Friday. We picked up a few more dollars from the weekend hold, primarily due to the continued down move of the Eur/Usd.

OneNightStand 08/08/08 entries--
All below exited this morning, 08/11/08, after midnight--
*Eur/Usd: Short @ 1.5192 –exited at 1.4979 for 213 pips profit.
*Gbp/Usd: Short @ 1.9269 –exited at 1.9194 for 75 pips profit.
*Usd/Chf: Long @ 1.0714 –Exited at 1.0814 for 100 pips profit.
*Usd/Jpy: Long @ 109.89 –Exited at 110.05 for 15 pips profit.
Total Profits: $ 30.22

Then came the placing of the week's FirstStrike orders:

Soon after, all 5 trades were executed and summarily stopped out by early morning.

The following were this week's FirstStrike entries:

• Eur/Usd: Short @1.4935, stopped out at 1.4995 for a 60 pip loss.
• Gbp/Jpy: Short @210.57, stopped out at 211.47 for a 90 pip loss.
• Gbp/Usd: Short @1.9148, stopped out at 1.9208 for a 60 pip loss.
• Usd/Chf: Short @ 1.0764, stopped out at 1.0824 for a 60 pip loss.
• Usd/Jpy: Short @ 109.56, stopped out at 110.16 for a 60 pip loss.

It is common for the markets to be fairly choppy after big moves like we experienced last week. So, out of the markets at least until Friday where there may be some potential OneNightStand trades--- we can do some study, some research and maybe think a little about the psychology of trading.

On Friday, I asked if any of you had some good success from taking the trades last week, and for those who felt like it to send an email so I could share some feedback so people can see how normal human thought processes need to be modified in the quest to become capable traders.

I got an overabundance of responses, and I thank you all very much for your contributions. I have to admit that I was actually amazed that so many have been faithfully pulling the trigger on these trades through the bad weeks as well as the good ones like last week.

I will post a few of them below tonight, and tomorrow post a few more.

Some key trading fundamentals came up naturally in some of the emails and I want to make sure others get to see them.

Some of the emails I received follow below:
(I'm sorry there is not room for all of them, thanks again to all of the writers)
----
I was surprised to hear about the trader that didn't get his fills at Oanda, must say I have never had a problem with them but my trades are small compared to some of the other traders there. Anyway it has been a good week for me to with my little system, here is the spreadsheet for the systems trades for the week. The only difference is I closed ou this morning with 152 pips instead of the 209 that were available at day's end, I still get a little nervous I guess though I am getting better.
Have a great weekend,
Xxxxxx

-----
Great trading week. Amazing in fact. As you know, I was in a pretty serious drawdown (64%) and this one week, I gained 80%. Now I am almost back to my original account balance and I am confident I will surpass my previous high over time whether it is from this trend or another.

I didn't like that drawdown, but generally I was okay. That is not to say I didn't go through the typical psychological crap. I did. But, the best result is, I persevered and stuck with the discipline. This showed me how strong the method is once you hop on a trend (and it was early in the trend) and maintain your discipline.

I should have learned the lesson below from your posts already. I made an assumption. First mistake. I took vacation this week (first in 2 years but yes I did work all week anyway, just did it from beach)
and did not bring my computer knowing there was one here already. I was on the computer a few times on Thursday and I decided that after I everyone went to bed I would set up the ONS trades. Well, there was a big storm and the internet went out. I couldn't believe it. I had much more anxiety over that then I did about my drawdown. It was midnight and all I could do was sit and watch the damn modem light wishing for it to go back on. Please stop blinking and go solid. Please.

I then looked for an all night internet cafe somewhere on the island via phonebook to no avail. I actually contemplated waking up a relative who lives here. That would have won me some points with the family.

I couldn't sleep as I was as anxious as a teenager the night before his big first date. I kept checking the connection every couple of hours for service. Waiting, waiting. This was like watching water boil. Painful.

Finally, it dawned on me that I could try to access my account through my phone. They have a beta for this on Oanda that I had looked at before. Not charting but can trade. I then contemplated violating one of my cardinal rules, which would be to rely on your e-mail to signal the trades. Key word is contemplated. Luckily, early the night before I had looked at the 10/40 MA and recalled the direction for the buys/sell. I was fairly confident, after this weeks trend and the current prices, that the MA lines weren't going to change in those hours.

I entered my trades solely from my memory as to where the highs and lows were and surprisingly I wasn't that far off. In fact G/J, was right on, not that it makes a difference with that trade. I did miss some movement in the trades but still profitable heading into weekend.

My lesson: always be prepared. I went out and promptly bought a wireless cell card for my laptop and will add a dial up account to my repetoire as well. Will this get entered in my book of shame?

Without a doubt.
Xxxxx
-----

Hi Joel,

Great trading this week for you alpha account. I can only imagine how your other trading accounts did. I was trading your first strike method and had a 21% increase in my capital from this week. I have traded it a total of 4 weeks now (3 weeks in drawdown(-8%) and 1 profitable week (+21%)). I just wanted to say thank for all of your help to us small fish out here.
Thanks for your help,
Xxxxxx

-----
Thanks to all of you again for all of your meaningful responses.

See you tomorrow.

Current equity is $835.63.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Infiniteyield Forex in Action! New All-Time Equity Highs! --IFCN Wk 35 -Fri- Equity: $869.12

Trading is more a mental game than financial.

There will be no chest-beating from me after such a great week. Those of you who took the FirstStrike and OneNightStand trades this week are very glad they did, and should feel welcome to do a little chest-beating if you feel like it. You deserve it, because you actually took the trades. Those who took the reverse-trade short in the Eur/Usd can buy the drinks this weekend.

Enjoy those good feelings as much as you can, because the simple truth is the good feelings never feel good enough to eradicate the negative feeling experienced when undergoing the continuous psychological drain brought on by months of losses.

My simple summation of the week, “It's about time!”

Profiting as a professional trader comes down to taking your trades and holding on to the winners as long as they keep going your way. How one accomplishes this mission is part of the journey.

After this week's action, many who've just watched from the sidelines as FirstStrike was successful in so many of the pairs can see how it is actually TIME that makes the large profits possible from proper currency speculation. The only thing that stopped the Euro and the Pound from falling further this week was Friday's closing bell.

This action made it possible for FirstStrike and OneNightStand to profit mightily from the one-way markets.

If we had not been stopped out prematurely on the Usd/Jpy and the quick, errant long trade in the Eur/Usd, we would have had a HUGE week in the Alpha account. As it was, I still had some decent size on for the Gbp/Usd and Usd/Chf trades. The ONS trades today were simply the topping on the cake.

Even I was surprised as to how profitable the ONS trades were today. It goes to show that even experienced traders can underestimate the strength of panic and disappointment in large capital markets. That is why we tend to follow our own rules quite studiously – we know that the emotions of fear or greed can overwhelm the logic that we base our profit centers on.

Last week I touched on the “majority” rule: When the majority of a market's participants finally realize a new trend is present, you are likely at the midpoint of the move. I am certain that the majority have finally figured that there is a new trend in the currencies now, and they just found out for sure – today!

I was a beginning trader once too. I know that many who entered early in the week took profits after a couple of days in their favor, just because they've experienced so many losses in the past weeks. Only a few of you were able to resist taking the large profits available by Wednesday that paled into insignificance by Friday.

If any of you actually had good success from taking the trades this week, I would love to hear from you. Please send me an email.

I've already heard from one serious trader whose short Eur/Usd entry order (reverse trade) wasn't filled at all on Oanda. The jury is still out how they're going to handle the out-trade. It is markets like these that really test traders and the systems they trade on. I experienced no difficulties, but maybe others have....

I would love to share some of your feedback (no identifying material will ever be transmitted) with others so people can see the normal human thought processes that need to be modified.

--------------------

Here's the week's recap:

The data below is as of Friday's close, Aug. 8, 2008:

Start of week equity: $681.21

OneNightStand Exit(s) on 08/4/08 :

None--

Completed FirstStrike trades this week:

• Eur/Usd: Long @1.5627, stopped out at 1.5571 for a 56 pip loss.
• Gbp/Jpy: Short @211.98, stopped out at 212.88 for a 90 pip loss.
• Gbp/Usd:Short @1.9686, exited Friday at 1.9202 for 484 pip profit.
• Usd/Chf: Long @ 1.0530, exited Friday at 1.0808 for 278 pip profit.
• Usd/Jpy: Long @108.30, stopped out at 107.70 for a 60 pip loss.

Total losses: 206 pips
Total profits: 762 pips
Net profits: 556 pips

OneNightStand 08/08/08 entry(s):
*Eur/Usd: Short @ 1.5192
*Gbp/Usd: Short @ 1.9269
*Usd/Chf: Long @ 1.0714
*Usd/Jpy: Long @ 109.89
All above to be exited Monday morning, 00:01 CST
Unrealized Profits: $ 27.60

End of week equity: $869.12 (includes unrealized P&L)
Total Gain for Week: $187.91 (27.5% weekly increase)

This was admittedly a great week.

I didn't lose very much on the long Eur/Usd FirstStrike trade as it was only placed with minimal size. The Gbp/Jpy loss was not great either, but the Usd/Jpy was a full sized loss.

Nevertheless, the large Gbp/Usd and Usd/Chf trades were in markets that appeared to be on a mission. My only regret is that I didn't get on a Eur/Usd reverse trade. That would have been great, but it doesn't pay to get greedy.

As I stated last week and numerous times in the past, the way one profits from trading is by having substantial size on substantial winners.

Now that the world is totally aware of the Dollar trend change, trading may get more difficult again. Or not.

We'll see.

See you next week.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Despite Adversity, Patience wins out! --IFCN Wk 35 -Thu- Equity: $755.34.

"He that can have patience can have what he will."

Benjamin Franklin

Most don't remember that Benjamin Franklin was our nation's prime mover helping to establish the paper currency system in America. His early currency exchange provisions enabled our flegling country grow to the behemoth it is today. Whether for an ultimate good – or bad result, time will tell; he did understand economy and the proper use of money. He considered it a tool to be used adroitly and at the right time.

This was the right time to be involved buying the dollar and selling almost all other currencies.

Concerns about growth of world economies slashing demand for commodities are prompting traders to sell most currencies vs. the U.S. dollar. Countries such as Australia and Canada export many major commodities, such as oil, natural gas, and base metals. This drop in commodity demand and prices makes their currencies vulnerable too.

At the same time, weakening global growth and softer oil prices have led European investors to return to the greenback as a safe-haven currency.

Because of these forces, this has turned out to be a very good week for FirstStrike.

We are still in 2 FirstStrike trades that are profiting nicely. The only way things could be better would be if we still had the Usd/Jpy trade working for us, and of course a short in the Euro. Finally the world has come to a realization that the dollar should not have been sold as deeply as it was.

That is the nature of free markets. They overdo and then correct themselves, usually at the expense of the most irrational. The key to profiting is having robust methods for determining reasonable entries in the (temporarily) unreasonable market.

The following are this week's remaining FirstStrike entries:

• Gbp/Usd: Short @ 1.9686, stop 1.9746. Trade in progress.
• Usd/Chf: Long @ 1.0530, stop 1.0470. Trade in progress.

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

Current equity is $755.34.

I do have serious concerns about the profitability of any OneNightStand trades that might be executed tomorrow. With the extreme moves that have taken place already this week, the likelihood of most of the markets energy being spent is great. I'll still take the trades.

See you tomorrow.

Have a good evening.

Joel Rensink

www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Euro Contretemps! --IFCN Wk 35 -Wed- Equity: $717.77.

Two more FirstStrike trades have bit the dust since Monday's
Eur/Usd loss. Surprisingly, the long Usd/Jpy and not so
surprisingly, the short Gbp/Jpy.

The dollar is in the midst of a major rout against all
the other major currencies. It was inevitable, considering the
world's unflagging bearish stance of dollars and anything dollar related over the past 2 years.

The press just loved reporting how the great US was experiencing financial difficulties. The constant rant about how the US' excesses were finally coming home to roost was a bit too early, but understandable for the world's have-nots. The “coming home to roost” consequences are reserved for a later time....

Reminds me of a metaphor involving an auto accident. Be careful about laughing at your fellow traveler's soiled clothes from the contretemps before you realize yours are shredded.

When any market reaches an apex it has little else to do but
reverse. The greater the surprise to the largest group
financially involved-- the greater the rout! This is a HUGE
surprise to most which involves many interrelated markets, so a serious reversal is likely in order.

-----
I got an interesting email within the last day that I will share
with you.

Joel,

I’m glad to see that the FX markets are turning around. I
have a question I was hoping that you could provide some insight to with regards to trade size.

As you mentioned to me in a previous e-mail, if you increase
your profits, you will increase your trade size.

At what point do you need to start to splitting up your trades?

For example, a friend explained to me once when I asked the
question, “If I had $5M USD, and I wanted to buy Silver Eagle
coins, how long would it take to get the coins?”

His answer was to the effect of, “Well, if you put that much
money out on the street for that product at once, then you will be raising the price of the product you are buying. If you DID want to buy that much, you would have to do it a little at a time”. Translation…. You can’t effectively make that
big trade all at once.

I did a Wikipedia search under Algorithmic Trading
http://en.wikipedia.org/wiki/Algorithmic_trading and there is
discussion on how algorithms in the trading systems can take a trade and break it up into multiple orders.

The bigger the amount being traded, the more it needs to be broken up into smaller amounts.

So my question to you is, if you started an account with $500, and your trade risk was 1% per trade. At what point ($$ amount) would you need to begin splitting up your trade size?

Thanks!

Xxxxxx

-----

Answer:

Good question.

This question can only be replied with a "that depends" answer.

Which market?

I could buy $5 million in silver coins instantly (ok, 3 minutes)
without raising any street price anywhere. Of course, I know
where to buy. If you tried buying that quantity of silver from
the small locality of Witchita, Kansas you definitely would
drive up the price tremendously.

Same goes with most markets. I could theoretically trade
FirstStrike and ONS without changing anything with my current money management all the way up to 2 - 3 million account size. Then I might consider breaking up the trades a bit.

I would likely make the change sooner because I would be
able to smooth equity swings by entering at different entries. When the Alpha account gets big enough, I'll do it.

Thanks for the question.

Joel

-----
The following are this week's FirstStrike entries:

Eur/Usd: Long @1.5627, stopped out at 1.5571 for a 56 pip loss.
Gbp/Jpy: Short @211.98, stopped out at 212.88 for a 90 pip loss.
Gbp/Usd: Short @1.9686, stop 1.9746. Trade in progress.
Usd/Chf: Long @1.0530, stop 1.0470. Trade in progress.
Usd/Jpy: Long @108.30, stopped out at 107.70 for a 60 pip loss.

Note: Any FirstStrike trade not stopped out before Friday gets exited on Friday just before 15:00 CST.

The Usd/Jpy trade getting stopped out was more than a little
irritating. I would have preferred that trade had remained
intact. I was sure that the dollar was going to gain vs. the
yen. The bump in profits would have been welcome.

Current equity is $717.77.

Have a good evening.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Yahoo or Hotmail addresses. Nothing personal, but they've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

Build a Higher Return, They will Come! --IFCN Wk 35 -Mon- Equity: $705.30.

Former Fed chairman, Alan Greenspan drew an intense picture of
the current financial market challenges in a recent interview.
Greenspan stated that it was a "once or twice a century event
deeply rooted in fears of insolvency of major financial
institutions". He also felt that it was increasingly likely that
more bank and financial institution bail outs would take place
in future months. He said that he was convinced that the entire
situation would not go away until the housing market starts to
stabilize.

I don't think we have to wait too long. A lot of things are
beginning to happen, and this week's action is looking like a
potential tipping point.

Gasoline purchasing now burns up 11.5% of the average
household's income, up from 8.4% last year, and 4.8% in 2003.
Look for that to change downward. People's behavior changes
when costs for a utilitarian item doubles quickly.

We are beginning to see dramatic drops in oil prices. Already,
people in America are beginning to feel a collective sigh of
relief and are beginning to revert to previous behaviors...,
consuming. Something the US does very well. Which heats up the
economy quickly.

The stage is getting set for a major move in the FX markets, and
professional currency traders are starting to see great risk to
the previous status quo. That is, selling the dollar anytime
you felt like it and then seeing it fall.

The Dollar just doesn't want to drop that much anymore, and if
it does, it is for just a few hours, not days.

There are four banks meeting this week. Another bank started
lowered interest rates two weeks ago, the New Zealand Reserve
Bank. That was the highest yielding industrialized nation's
currency, and according to their statement of intent, will go
much lower. If some of the other important banks start taking a
similar tack, which is my strong belief--- and the Fed takes a
tour towards higher interest rates, big changes can and will
happen.

The result? A flood of interest in the dollar for a carry trade
vehicle. And a vehicle for investment for dollar related
markets, like the stock and real estate markets, both very
undervalued assets.

If you have all the major industrial central banks in the world
lowering interest rates, while simultaneously the Fed is
hawkishly about to raise rates, that will feed the flow of
money. Funds will flow into the U.S. from the rest of the
world. That could further encourage the central banks around
the world to continue lowering interest rates, locking in a new
trend towards the dollar for a significant period.

This could be a very key week. We're already involved via
FirstStrike.

_________________________

The Gbp/Usd fell strongly today, filling our short at 1.9686
which continues with good profits at the time of writing.

Seven hours later, the “turtle” short signal mentioned last
week @ 1.9648 was executed for those who follow it.. Once the
market hit that price, it didn't even pause. It dropped through
the area like a hailstone on a mission.

Also filled was a Eur/Usd long trade that was marked for death--
executed only due to a fund stop-running spike and subsequently
stopped out. Also filled were a short Gbp/Jpy and a long
Usd/Jpy trade. No trade in the Usd/Chf yet.

The following are this week's FirstStrike entries:

• Eur/Usd: Long @ 1.5627, stopped out @ 1.5571 for a 56 pip loss.
• Gbp/Jpy: Short @ 211.98, stop 212.88. Trade in progress.
• Gbp/Usd: Short @ 1.9686, stop 1.9746. Trade in progress.
• Usd/Jpy: Long @ 108.30, stop 107.70. Trade in progress.

Note: Any FirstStrike trade not stopped out before Friday gets
exited on Friday just before 15:00 CST.

Current equity is $705.30

Have a good morning.

Joel Rensink
www.infiniteyield.com

PS: To receive the FREE! trading rules for the Infiniteyield
Forex Challenge ($499 value) and the semi-monthly
newsletter about this challenge, send an email to:
newsletter@infiniteyield.com and tell me to which address
you would like it sent. Please do not use AOL, Yahoo or
Hotmail addresses. Nothing personal, but they've been known
to filter out more good mail than actual spam. Try a Gmail
address. It's free, simple and perfect for traders!

Dollar Strength Now Obvious- to Some! --IFCN Wk 34 -Fri- Equity: $681.21.

An old rule for trading goes like this: When the majority of
participants finally realize a new trend is present, you are
likely at the midpoint of the move. I have seen the
ramifications of this rule played out countless times, in
futures, stocks and definitely the currencies.

I'm not absolutely sure that the majority of participants
realize a new trend starting in favor of the dollar yet, but
most active participants of the market are beginning to fear
being short the dollar for any period of time. Especially
those who have been royally faked-out by news reports this week.

I wouldn't be surprised to see the Eur/Usd getting down to the
146 – 147 level before the end of the year. It has increased
vs. the dollar for a very long time. Every bull/bear market
gets overdone. Even if the Eur/Usd has farther to go in the
future, nothing fatal to the major trend will happen if it has
a shorter-term retracement for while.

I don't attempt to predict what will happen, but I allow myself
to anticipate what is most likely to happen.

I would rather be the one surprising the masses instead of being
the one surprised!

___________________

Here's last week's recap:

The data below is as of Friday's close, Aug. 1, 2008:

Start of week equity: $675.94

OneNightStand Exit(s) on 06/28/08 :
None--

Completed FirstStrike trades this week:

• Eur/Usd: Long @ 1.5767, stopped out at .5707 for a 60 pip loss.
• Gbp/Jpy: Short @ 213.75, stopped out at 214.65 for a 90 pip loss.
• Gbp/Usd: Long @ 1.9946, stopped out at 1.9886 for a 60 pip loss.
• Usd/Chf: Long @ 1.0407, exited Friday at 1.0508 for 101 pip profit.
• Usd/Jpy: Short @ 107.31, stopped out at 107.91 for a 60 pip loss.

Total losses: 270 pips
Total profits: 101 pips
Net losses: 169 pips

OneNightStand 08/01/08 entry(s)
None--

End of week equity: $681.21 (includes unrealized P&L)
Total Gain for Week: $ 5.27 (0.7% weekly increase)

Before anyone sends me emails on how was it possible to gain on
a theoretically losing week, there is only the truth:

I had substantially more size on the winning Usd/Chf trade than
on my losing trades. The losers had less initial position size
than normal. My position-sizing algorithm was responsible for
the strong deviations in both cases.

As I've stated numerous times in the past, the way one profits from
trading is by having substantial size on your substantial winners.

Which worked out fine this week. The dramatic improvement in
return from my money management is rarely this dramatic.

I look forward to next week.

Joel Rensink
www.infiniteyield.com

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