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TranceAddict Investors Club @ Marketocracy (pg. 181)
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| Comrade Stalin |
Thanks again Cap. I won't be taking the Level 1 until June 2011. :(
Anyone interested in currency trading. I think I have found a great carry trade. I believe the Indian central bank has begun a trend of raising interest rates, currently from a bottom of 4.75% to 5%. This should serve to strengthen the Indian Rupee. Meanwhile, the American central bank has kept interest rates basically at 0% and is expected to keep it there for the foreseeable future. That should serve to weaken the US dollar. How do we trade this? Sell the USD/INR currency pair. You're selling US dollars to buy the Indian Rupee. Once the Indian Rupee appreciates enough against the dollar, you can buy back more dollars than you could before, and make mucho profits. India is largely unscathed from the West's financial woes and seems to be on the up and up.
Also, keep an eye out on the Australian dollar. Seems like they are also raising their interest rates.
Shakka, what do you think? |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Thanks again Cap. I won't be taking the Level 1 until June 2011. :(
Anyone interested in currency trading. I think I have found a great carry trade. I believe the Indian central bank has begun a trend of raising interest rates, currently from a bottom of 4.75% to 5%. This should serve to strengthen the Indian Rupee. Meanwhile, the American central bank has kept interest rates basically at 0% and is expected to keep it there for the foreseeable future. That should serve to weaken the US dollar. How do we trade this? Sell the USD/INR currency pair. You're selling US dollars to buy the Indian Rupee. Once the Indian Rupee appreciates enough against the dollar, you can buy back more dollars than you could before, and make mucho profits. India is largely unscathed from the West's financial woes and seems to be on the up and up.
Also, keep an eye out on the Australian dollar. Seems like they are also raising their interest rates.
Shakka, what do you think? |
Carry trade is great until it unwinds in your face. I've never done one though, it's not my bag. |
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| Comrade Stalin |
| quote: | Originally posted by Shakka
Carry trade is great until it unwinds in your face. I've never done one though, it's not my bag. |
It looks like the trend has just begun so there would be plenty of time to get out before it unwinds. Carry traders need to keep an eye out on central bank policy of both countries. Either the Federal Reserve beginning to raise rates, or the Indian central bank lowering rates. |
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| Comrade Stalin |
Here are some great currency pairs I have found for anyone trading FOREX. These reasons are why they are good.
1) They are technically in an uptrend as indicated by their 50-day versus 200-day moving averages. (50-day MA may be below 200-day MA but they are very very close or it appears the 50-day MA is about to cross above the 200-day MA) [Read further below to learn about moving averages]
2) Both the Australian dollar (AUD) and New Zealand dollar (NZD) have central banks which have recently raised interest rates.
3) The other currencies have central banks which have lowered interest rates or kept them very low.
AUD/HKD
EUR/AUS
AUD/SEK
NZD/SEK
NZD/USD
Moving Averages: Obviously, you want to buy something that is up-trending, or going up. Moving averages help one to tell when something is uptrending or downtrending. The moving average is simply the average price over a given period, for example, I use 50-day and 200-day, which is a pretty widely used parameter. Uptrends would require the 50-day MA be above the 200-day MA, and downtrends would have it in reverse. That's all. See how the moving averages are indicating SPY (S&P500) to be in a downtrend? SPY is basically the stock market, so I can assume the stock market will either be flat or down in the foreseeable future.
So I load up on the short side, writing naked call options, shorting certain ETFs, writing covered call options, etc. Strategies that make money when things are bad. So far, I'm breaking even, which is better than making losses. The bad thing though is that when the market flat lines and does nothing but stay range-bound, basically flat, my portfolio tends to do the same. Stay flat, not doing anything, because the market is neither making any substantial moves down or up. I really wish it would either just plummet or skyrocket, instead of this half-empty, half-full, attitude it's been in lately. |
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| Comrade Stalin |
Shakka, I've got a question.
I decided after the market close I want to buy SPY the next day. But the uncertainty of the next day's opening price is too much. I want to secure the closing price for my trade. What could I do. Some things I thought about were...
1) Make my decision and buy in the last 10 minutes of the trading day.
2) Buy the S&P500 futures contract.
The trade lasts just 1 day. |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
Shakka, I've got a question.
I decided after the market close I want to buy SPY the next day. But the uncertainty of the next day's opening price is too much. I want to secure the closing price for my trade. What could I do. Some things I thought about were...
1) Make my decision and buy in the last 10 minutes of the trading day.
2) Buy the S&P500 futures contract.
The trade lasts just 1 day. |
If you're so uncertain about where the price will open on the next day, how are you so sure you want to buy it right now? The shorter your time horizon becomes the easier it is to be wrong, imho. Things you could do:
1) Make up your mind faster so you have time to act today ;)
2) I don't know how to trade futures, but I doubt you can buy a 1-day future (or a future that will cover you for just the 1 day you seem concerned with).
3) Do nothing. Make a mental note for next time to not sit on your hands.
4) Can you trade after hours? SPY should be very liquid (the index options themselves even trade after 4:00, but I wouldn't do it). |
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| Shakka |
| quote: | Originally posted by Comrade Stalin
All I want to do is secure a price as close to the closing price as possible. There are no 1-day futures. What I would do is, buy, for example, the December S&P500 futures contract, and sell it in just 1 day as if it were a stock. The reason I bring up futures is because they trade almost 24 hours a day so I'd essentially be able to trade the S&P500 after-hours.
I have developed an algorithmic arbitrage strategy based on my Betapeg Leading Economic Index. The trades last just 1 day and the trade-able arbitrage events have occurred just 5 times in the last 40 days. I have an 80% accuracy with an annualized return of 41% so far. Risk is limited because the portfolio is all cash most of the time. These results come from a test and I am now constructing a way for me to utilize this strategy in reality with real capital. |
I don't think I can help you. Put in a market order at 3:59 and you'll get about as close to the closing price as you're gonna get. Not sure what else to say. |
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| Comrade Stalin |
| Thanks, just thought I'd ask. |
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| Capitalizt |
Well this is insane.. The fed is revving up the printing presses again and are about to buy as much as $1 trillion in government bonds.
http://www.bloomberg.com/news/2010-...-fluctuate.html
I've got everything in SLV so I'm not complaining, but people with their savings in cash are gonna get raped. On top of <1% interest rates, the greenback is set to lose a lot of value in the coming months/years. |
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| Comrade Stalin |
I'm trying to take the other side of that trade Capitalizt. But it's killing me :-P. The trend is definitely up. I'm going to short silver again with a stop loss to limit the probable loss I'm going to take. At the same time, I'm buying gold as a hedge. Even though I don't like gold, I can't go against the trend when it's so strong.
If you think the dollar is going to drop in value relative to other currencies, you can short the dollar. Some good currency pairs to buy are...
AUD/USD
NZD/USD
NOK/USD
INR/USD
CAD/USD
Just make sure you use technicals so you buy at the right price. |
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| Comrade Stalin |
Hot off the presses. Japan's central bank intervenes. Sell the Yen!!
Bought: NZD/JPY, NOK/JPY, AUD/JPY, CAD/JPY, and last but not least USD/JPY
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Japan leads Asia stocks higher on yen intervention
2 hrs 22 mins ago
TOKYO – Asian stock markets climbed Wednesday, with Japanese shares jumping after the government announced its first currency intervention to weaken the yen since 2004.
The yen had been trading at 15-year highs against the dollar, battering the Japan's vital exporters and undermining an already fragile recovery in the world's No. 3 economy.
Japan's finance minister confirmed that the central bank stepped into the market to sell yen and buy dollars shortly after 10:30 a.m. local time (0130 GMT). The dollar bounced up to 84.71 yen from a fresh 15-year-low of 82.87 yen earlier.
Japan's Nikkei 225 stock average rose 171.00 points, or 1.8 percent, to 9,470.31, reversing course after posting light losses earlier in the morning.
"We have conducted an intervention in order to suppress excessive fluctuations in the currency market," said Finance Minister Yoshihiko Noda, suggesting Japan might intervene again.
http://news.yahoo.com/s/ap/20100915...d_markets/print |
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| Sushipunk |
| quote: | Originally posted by Comrade Stalin
AUD/USD |
Yeah, the AUD was up to USD 94c today. Hasn't been that high in ages. Trying to think of things I should buy from America at the moment :p |
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