Forex rebates on every trade - win or lose!

Something a little different here, from the usual Cable chart.
It's a comparison between:
Red Dollar Index (Dollar against a basket)
Blue /$
Green /$

As can be seen, the Green /$ faithfully follows the herd and is almost a mirror
image of the Dollar index. So it cannot really be said the the is a weak currency,
seeing as it stays with the mean of $ FX crosses.

However, the Blue /$ (Cable) is outperforming significantly to the upside. This is
suggesting that Sterling is a stronger currency than the mean. Or that there is
more speculative money Long Sterling against the Dollar than the other currencies.

I don't really see why Sterling should be regarded as a strong currency versus other
currencies. (Perhaps someone else can and can post a few reasons?)

Therefore if you believe that stuff reverts to the mean, and you reckon that the
Dollar will strengthen, then the cross to short is Cable (/$). If you reckon that
the Dollar will weaken from here, then the trade to take,(atm), is a Long on /$
as there should be more upside than Cable as Cable comes back relative to the
mean even though it is appreciating against the Dollar.
Of course, if you believe that Sterling should trade at a premium to the mean,
then you ignore all the above. :-)))
If so, let's hear your reasons.

Another possible trade out of this scenario is a long /, as Sterling reverts to
the mean, and, as the chart shows, the Euro tracks the mean.
I'll try and bang on a chart after the comparison chart showing / at the bottom
of a channel.

I'm still getting to grips with Forex, so please take all this as just floating a few
ideas.

Just noticed that in the chatty bit near the bottom of the previous post,
that I inadvertantly put /$ instead of /, even though I had made it
obvious that I was talking about /.

So to be absolutely sure, the bottom chart is Euro/Sterling.

I've amended the error in the previous post. Sorry. :-(

Really enjoying this Mels. Just don't have any time at the moment, as I'm more out than in :S

General comment re cable right now is that I switched long just below 1.8990 on Friday. The drop was pretty drastic, but it didn't follow through and it may have bounced, albeit from a little higher than I was initially looking for. So a retrace down to the 60s is acceptable for me, on my chart anyway - that's where my previous rising resistance thingie was breached. Drastic change this weekend too, so I'll decide later tonight if I'll carry on this week.

Thanks for your comment, Chocco, glad it's of interest and taken your
mind off other stuff, albeit, just for a little while. Obviously, from your
posts ref your Mum, you have far more important stuff to occupy you
atm.

Hope things go better for you.

Thanks Mels. Things change from one day to the next at the moment.

I really am rubbish. I meant falling resistance thingie in my previous post. And 40s, not 60s. Blimey I'll get there in the end.

Gone back to some rising lines I was using in the summer. I can see Hils's 1.8850 if cable does decide to bumble on down (ref the lowest supporty thing) and if it hangs about long enough (MPC maybe) then cable won't breach what I'm now hoping is support (the upper sloping down jobbie). Although I'd much prefer it to carry on up now :)



And just like a girlie, I haven't decided yet :)

Still short here :-)

Mel,

You've put a lot of effort into those posts - thanks. I do have a couple of opinions about them, but it's a bit early in the morning and I can't really think of a way of putting into words those thoughts.

Choccie,

Just caught the tail end of something being wrong with your mum. Sorry to hear that and hope everything's OK.

Bosley,

I've never read any books either on trading or on forex, nor do I intend to. I feel now that it would serve simply to confuse me. The only two remotely related books that I've read have been The Zulu Principle (fantastic - I read it just at the end of the bull market in Y2K and subsequently shorted every overvalued pile of trash in sight) and Where are the Customer's Yachts (serves to make you understand exactly how rigged the whole thing is). I was fortunate when I started FX trading in that a friend introduced me at a football match to the head of FX for a large US investment bank. He pointed me in the right direction and I just went from there. There's nothing that he told me that hasn't already been said many times on this thread.

Fwiw, I'm still short cable and staying that way for the time being.

FXCM cable quotes mine showing 2-3 pips...

usually 5 isnt it?

Not complaining..but is it right

hilary, thanks for replying. i'll put them on my list.

btw, does anyone know what happened to the bookstore link moneyam used to have at the top of the page?

Cable short term direction becomng a coin toss atm..

Time to tighten stops, imo. Looks to be gathering some support on the faster charts, so the worry is that it could spill over into the slower charts.

Bosley,

Re the books, The Zulu Principle is specifically about a method of putting a value on stocks according to their growth prospects. It goes on a lot about PEGs (which aren't just for hanging washing). It isn't about trading or charting as such. It has since been superceded by a title called Beyond the Zulu Principle which considers valuations of the tech stocks which weren't in existance when the original book was written. If you trade or invest longer term in small cap stocks it's an essential read imo.

I can't recommend Where are the Customer's Yachts, I'm afraid, as it's sole function was to make me even more cynical and sarcastic than I already was. Similarly, I started to read many moons ago a book called The Madness of Fools and something else (sorry, I never can remember the proper title) which examined every bubble since Adam and how the herd mentality and greed suckered Joe Public into those bubbles. It's an investment classic which, I believe, some banks issue to new recruits and instruct them to digest before they let them loose with any money. I found it a bit tiresome and never finished it.

If you're interested in FX books, there are 2 that I am aware of although I've not read them and obviously can't recommend them.

One is called Bird Watching in Lion Country by Dirk somebody or other. The other book is by Kathy Lien who writes the DailyFX articles although I don't know the title of the book I'm afraid. You can probably find it on the DailyFX website or through Google.

edit: The book that I thought was called The Madness of Fools .... is actually called Extraordinary Popular Delusions and the Madness of Crowds. I said that I couldn't remember the title.

Fed's Moskow is talking up the US economy and hinting at possible
rate rises down the line. Not sure what you can believe close to
an election, but here's the article.

Link to MarketWatch article

He repeated his belief that the risk of inflation remaining too high is greater
than the risk of growth being too low.
He said he supported the FOMC statement that additional firming of monetary
policy may be needed to bring inflation down, but said the decision will depend on
how the incoming data affect the outlook.

Stops already tightened Hils,thanks.

Showing some of the stuff here that I've sent to my daughter on the nightly PDF e-mail. Don't forget that I'm writing this to someone who is just starting out, so I'm not talking down to anyone here with some of the simplistic stuff I'm putting in.
So please don't anyone take offense, none is intended.

I'll be glad when she's had this interview, so that I can quit this. Bleedin' daughters,
they can twist dads round there little fingers, can't they. :-)

Couldn't resist posting a Damien number :)

Morning folks, stopped out of my short last night for a total of zero.... Powder is still dry though :-)

I thought that MM was the only horny little devil around these parts, meggers. We established that a few weeks ago.

:o)

Mel,

I've still got some thoughts re your charts that I intend to put into words. It's just a case of getting round to it. In the meantime, I don't know if you've seen this link which might help with some of your research.

Somebody once thoughtfully bought me Prechter's Elliott Wave Principle - I got about as far with that as I did with Hawking's History of Time - and very brief it was too :S We used to have stacks of Asterix books in the bathroom when the boys were little and they've appeared again by stealth. They're a great read for those inbetween data spells, bos. ;)

Most folk seem to be reading the same stuff, drawing the same conclusions, and putting on the same positions.
We can't all be right, can we?

It's not as simple as that Mels. At the end of the day (oh don't you just love cliches) the news fits the charts. We are dealing here with a highly liquid instrument and it's a given that anyone trading currency pairs must have an understanding of the fundamentals that move them. The effect can be radical depending on which side of the water the news flows. But that's it - the rest is up to us. There's an awful lot of scope in how we interpolate technical analysis. Me, I'm fairly useless with numbers and I prefer a visual picture. And don't go thinking you needn't carry on rambling on here once your daughter is through her interview :P

Well I'm radically spammed up with longs down to 1.8955.

Manufacturers are urging the Bank of England to keep interest rates on hold this week despite widespread expectations in the City of a quarter-point rise to 5% - could be a fly in the oinkment ;)

And thanks, Hils. Everything's ok inasmuch as my mother has had 4 trips to the theatre in the last 10 days - 4 more than she's had in the last year ;)

Good morning from Palo Alto, California, FXers. I've just consumed some Californian Cabernet with the label "The Smoking Loon". Should I worry about a) me, b) it, c) CADUSD?