The Big Score

Discipline and the big picture

2006-01-31T18:09:00.000-08:00

Margin Balance : $1,867.25
1nzd/usd + 1 usd/jpy (long)+ 1 eur/usd (short)
Available Position: $373,188.00

Lost my discipline for a bit on Friday I went long eur/usd just because bonds started moving up slightly, too much too soon, I forgot to think big picture because bonds have dropped significantly the past few days that Friday's move was a drop in the bucket. I averaged that trade down another lot and today a finally got an exit when the eur/usd rallied into the fed meeting (as if they were not going to raise). Short after the announcement, the market did their usual two step that can be expected to occur on days of the fed meeting. Shortly after announcement of the rate hike to 4.50% I took a short position in eur/usd on anticipation of future money flows, longer term yields closed down however, so I expect a short term rally in the eur/usd against me in which case I will average the position down.

I'm also excited because tomorrow starts the forex.com trading competition. It will be interesting to see how I will trade now that there is pressure to produce returns within a certain timeframe. I should now be extra cautious not to let my discipline fade.

Slow & Steady

2006-01-13T11:54:00.000-08:00

Margin Balance : $1,614.80
1 nzd/usd + 1 usd/jpy sold
Available Position: $322,366.00

10-yr yield dropped changed by another -1.4% today. Bought 1 eur/usd as bonds continued to rise, then sold it after a rapid 60 pip rise. GOLD up big, interesting how usd/jpy is strong relative to usd/eur.

At this point some might say to step up the lots per trade to really get the compounding effect going, but I will continue going slow and steady just nibbling at opportunities so that when small opportunity turns into a big one I can really take advantage of it.

After the trade balance

2006-01-12T12:50:00.000-08:00

margin balance: $1,486.33
1 lot nzd/usd + 3 lot usd/jpy

Got a chance to average down on the usd/jpy. yield on 10-yr fell by 1.1% today, selling 1 lot usd/jpy, going to let the rest play out.

Interesting writeup from the Japan stock blog. With $90 billion inflow to Japan, have to wonder now that the Japanese market is selling 2x next years earnings vs the US, what will happen with all that hot money? Where will it end up?

Trade Numbers

2006-01-11T13:17:00.000-08:00

Margin bal : UNCH
Positions : 1 lot nzd /usd + 1 lot usd/jpy

market is basically unchanged since last post, except US bonds are lower, this looks bullish. I probably shouldn't do anything ahead of trade balance tommorow, but I'll add another usd/jpy lot ahead of wens rollover and then blow it out if the market moves up tonight, otherwise I'll ride it out with the numbers (as if they mean something).

On Balance

2006-01-09T17:07:00.000-08:00

Margin bal : $1,456.28
Positions : 1 lot nzd /usd + 1 lot usd/jpy

1 long nzd/usd position Put this on a few days ago, holding it for the interest rate differential.

I'm buying 1 lot of usd/jpy here, I figure the Japanese need a strong USD because we are their #1 consumer, if dollar gets weak against JPY then margins contract and so much for expansion. If Japanese investors don't put their money into the higher yielding US bonds, then BOJ will manipulate the currency into place. Maybe I will get lucky and usd/jpy will go down some more so I can average down.

Another theory I have is that gold precludes jpy moves, Japanese investors are big buyers of gold to protect them from the inflation they were promised. So naturally before BOJ starts an intervention they give their buddies a head start to position themselves for sudden currency devaluation by BOJ. This relationship will have to be studies further.

The Big Score

2006-01-09T13:39:00.000-08:00

We live in interesting times. An individual can now buy $1,000,000 worth of currency with only $2,500 down. That's right, ONE MILLION dollars with only Twenty-Five hundred down. Take a pair such as AUD/JPY where the interest differential is about 5%, that means you can potentially earn $50,000 (5% X $1 mil) a year on a $2500 investment just on the rollover interest. Of course all that glitters is not gold, the position could move against you and whip out your $2,500 in a blink. Nevertheless, the potential is there.

The bloguniverse has opened gems of personal finance and investment blogs which helped inspire this blog in conjunction with a trading competition. I'm am not a professional forex trader, I don't trade currencies for a bank or for clients. I do however trade stocks and bonds professionally for clients and I plan to use some of the observations in other markets which I have developed theories about and put them to work in the forex market. I don't plan to daytrade or use technical analysis as preferred by most participants in the forex market. I plan to position build based on multiday/week moves I think will occur, using a mini forex account (200:1 leverage), in search of the big score. I want to see if I can turn a nothing into something, and maybe if I can do it, so can you!