Couple of weekends ago, I discussed the weakness of global currencies (Article: Currencies: Foreign Currencies & Precious Metals Look Exhausted!), but by the end of the article I did give a warning signal that, from the short term perspective, the market sentiment seems to be heavily one sided against the Euro for the time being.
Today's Chart Of The Day looks at the current amount of speculators net short the Euro as of last Tuesday (reported by COT last Friday).
Last Monday morning in Asian trade we experienced a gap down in the Euro Dollar exchange rate and afterwards shorts got heavily squeezed throughout the week. Furthermore, this morning we have déjà vu in Asian trade as the Euro Dollar gapped down again.
This time around, the gap is much much bigger, and usually gaps get filled. Therefore, I expect a correction in the US Dollar all across the board and against other majors as well. Having said that, I still remain long the US Dollar against some currencies & precious metals.
Holly fuck dude singapore dollar just tanked hard. How did you know that one will fall so hard? Well done on your trade man. How much you up?
ReplyDeleteThat was indeed a good shorting opportunity for me. I loaded up on some EUR/USD FOPs strike 1.37. Already 20% up :-)
ReplyDeleteAnonymous: it's the SGD falling hard, it's the USD rallying. and in a big way!
I meant "It's NOT the SGD..." sorry.
ReplyDeleteAnonymous - I didn't know. No one ever knows, until it happens. However, Sing went up a huge amount, so naturally I thought it will retrace a decent amount back. To answer your other question, I'm up almost 600% on that trade, but I only risked 1% of my account.
ReplyDeletePej - well done :)
Now I'm curious Tiho. How did you get up 600% on that trade?
ReplyDeleteIt's actually 715% as of right now.
ReplyDeleteI shorted SGD at $1.2050 with a technical triangle formation - inflection point breakout. I knew the Dollar was going to rally, as we discussed many time. So as the tape broke out I used a 100 pip stop loss with 1% of my fund.
Singapore Dollar broke out, and exploded from $1.20 to $1.28! The rest is history...
Hum... I wouldn't agree with your accounting, but nice trade and congrats nonetheless!
ReplyDeleteIf I buy a forex contract for difference at $1.2050 with a 100 pip stop loss, meaning I risk 100 pips for 1% of my fund, that means I make 1% I risked every 100 pips. So, if the Dollar rallies from 1.21 to 1.275, that means I am up 750 pips or 7.5 times my risk. Simple.
ReplyDeleteThe reason I took leverage of 100 pips, which acted as a small stop loss, is due to a technical formation. So, for me, a break to the downside and I'm wrong and the break to the upside and I'm right. Triangles with low volatility will break and i didnt need to risk more than 100 pips to find out if i was going to be wrong, hence why I said I took large leverage at inflection point in the original post. It was lowest low bottom and now the trade is going off.
I understand your perspective, but I do not account this way for a position. Your notional exposure was a lot higher, even if you consider you exposed only 1% of your fund.
ReplyDeleteSo it's difficult for me to say that I'd be up 750% on that position. Yet I agree that with leverage, your fund is up say 7.5%. Two different things in my mind.