Happy New Year! Hope this is your best year ever trading.
A Focus on the Swiss Franc in 2008
Let's have some fun with the Swiss Franc. I want to use this thread to discuss trading it short term, intermediate term and from a long term perspective, as well as keep track on my long term bullish view of the dollar. Since long term views are very boring on a day-to-day basis, I am going to do my best to discuss daily trading of the Swiss Franc as well for those who may enjoy this currency pair.
"I am buying Swiss Francs" --- Jim Rogers, Renowned Invester , August 2007
Jim Rogers and other well known loud mouths buying the Swiss Franc. All the dollar doom and gloomers, all the carry trade armageddon folks. I DO NOT disagree with Jim Rogers views on the economy and the Fed. However, it is his way of delivering the message that I disagree with. I think Mr. Rogers may be the only coward who has completely deserted his country in time of need though. It is people like Jim Rogers who are weak and a country doesn't want anyway. People like Jim Rogers who could really help, but chooses to run. I hope the fine people of Western world teach him and his children well. I hope he enjoys his stay in China and learns as he grows old for we are always learning as human beings. Sometimes money is only a small part of our education, sometimes it is a large part. Jim Rogers reminds me of a professional athlete who wants to play for the winning team. He advances to the top of his profession through hard work and dedication. Soon he has caught the attention of a winning team like the NY Yankees and they call from time to time. They invite him to their land, to meet their winning team. Finally, his current team is not in the spot light at all, they are near the bottom of their group although they are working as hard as possible and have a fine athlete and leader on the team. This athelete used to teach the young players how to become great. Soon the athelete runs to the winning team with all the money and fame. Once he arrives, he tends to shun his old team, the team that gave him the opportunity to become great in the first place. The old team continues to struggle and now look for new leader to emerge from their group to help. At first the Yankees are fun, they keep buying winning seasons. When they play his old team they usually win. At first the fans from his old team cheered him, then the more he visited thet more lhe heard loud boos that were mixed in. Soon he was not remembered at all by any of his supporters, only the ones that booed him. As the Cycle of Life of life progesses, the athelete's old team begins to win a few games when they play each other. A new leader has emerged from the young group and is cheered by the fans. The Yankees begin to lose more often until they are just mediocre and it is no fun to watch a bunch of overpaid, pompus, unloyal players anyway. The athelete watches as his new management tries to make changes to get back to the winning ways. They are not experienced at losing and have no idea what to do. Their form of leadership has questionable values, why did he not see this initially? The athelete begins to lose faith in his once heralded leaders. They used to appear to be so brilliant and have all the answers. He even wanted his kids to play for this team. The cycle of life progresses and the athelete watches as his old team with proven values wins, and wins. The young players become fine leaders and atheletes. He wishes he had not left his team, especially not just for money. No one really cares about him much anymore. He gets fat and his bow ties do not fit. All the real fans remember is how he left the team just when they needed him the most. In their true time of need, after they gave him so much. And so the Cycle of Life continues.
"I am Selling Swiss Francs" -- DRT, Noname Trader, December 2005
I think Jim Rogers and all the other pundits are wrong. I am selling the Swiss Franc and buying dollars and have been since November 23, 2007. Since I doubt that CNBC or Bloomberg will invite me to discuss my reasons, or the Financial Times will publish me -- I thought I would start a thread here on Forex Factory to make the owners famous for publishing the correct call.
I am a contrarian by nature. I have been seeing a Long Term cyclical change in the relation of many currencies to the US Dollar. In 2006, I positioned in my long term accounts for a revival in dollar value. It did not happen and I lost a lot of money last year on these plays. The Yankees beat me every single game. The herd was right, the dollar kept going and going and going South. If you were to ask me explain why I am bullish on the dollar, I could tell you but it would not make sense. It has to do with a study of cycles that is unique to my macro view on the movement of currencies. I will say that I believe great wealth will come to those who begin to accumulate dollars and the best place to buy them may be against the Swiss Franc. You could certainly buy them most anywhere, but I am buying most of them here because lots of folks are selling them.
I do not trade on fundamentals or technical indicators, rather I believe that my view of cycles (in the case an up cycle) implies that a major fundamental change is approaching. I do not know what the fundamental change will be and really don't care.
My view is that the long term down which began in 1971 on the chart above ended in October of 2005. Since that time price has actually continued to move down and on November 23, 2006 a new [current] historical low was put in. I believe we are set to "Cycle Up" and the total cycle will last until Saturday, September 2, 2017. Basically a 10 year cycle up.
I am not going to elaborate further on this, I is voodoo to many and is really not that interesting to most. If you boil things down, the near term cyclical low of November 23 needs to hold. Not that a move below here would completely change my mind, but it would definitely make me weary of my forecast and any sustained building of value below here for a few months would mean I am definitely off on this view. Looking up, the previous cycle high in 2000 needs to be taken out and we need to build value above 1.8300 in order to move up.
In any case my call is a major move up in 2008 in this pair.
The Swiss Franc (USD/CHF) How I will trade it in 2008?
Long Term - LONGS
It is hard to trade cycle bottoms and tops. Almost impossible unless you are spot on the call. Even once you are moving in the right direction, you need a steadfast resolve to stay in as your profits decrease on corrections. A tough way to trade for most of us and not a good idea for most new traders with limited capital. Just for the Jim Rogers types. I have been buying down in the general low area since November 23, 2007 and am holding a good size postion that I will be adding to on the long side iff I get lucky, I will hold these longs for a "Long" time and leave money to worthy causes when I die. I trade these trades in my tax-qualified retirement accounts mostly
Intermediate Term - Longs and Shorts with a Long Bias
I will post a Swiss Francstrategy that I trade based on shorter term cycles of human behavior patterns. The average time in the market for these trades is approximately 37 days. And I am in the market about 87% of the time both long and short. When my long term view is up, I will still take shorts but I scale these trades down usually or pass on the cycle.
Short Term Trading - Daily Long and Short Positions
I use a method I call River Theory which is based on Price Distribution and the value curve. I have described it here in the past and will not go into the logic in this thread, rather I will just post my levels as often as I can and will put up a few charts to help with any discussion that evolves. The reason I will not get into my River Theory methodology in detail is that I just do not have time to keep up with it in a forum. I have used it to trade several markets, but here I will only discuss the Swiss Franc. I have tried to do more and it is just too much for me. It is my hope that many of you may gleen some ideas from it and that somehow it will help you with your own trading.
Good luck to all of you in 2008. I hope this helps you discover the Swiss Franc if you have never looked at this pair. Trading is the greatest profession in the world. It is the only thing I have done in life where I can lose money and still be happy.