Don't get sucked in by dollar strength | Forex Factory

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Don't get sucked in by dollar strength

  • #1
  • First Post: Feb 19, 2009 5:52am Feb 19, 2009 5:52am
I am positioning for the dollar to begin weakening again. Sure it is not what you are reading on the right side of the board here with all the stories but that is exactly the point. Ask yourself a simple question, "Why am I buying the dollar?" It has been a story of..."Well armageddon and the dollar is the best of the worst"

I think the dollar play is wearing very thin personally. Look at a long term chart and you will see a secular downtrend in the dollar, no one can argue this. We are printing dollars like there is no tomorrow. Consider the facts of supply and demand. And what if oil doesn't stay in the $30-40 range???

One lesson for newer traders is that when everyone is onthe dollar bandwagon, like NOW!, then the play is wearing thin. Don't get sucked in. Use your own intelligence and don't rely on those who simply report what is already widely known. It is hard to make money following the herd, but sometimes (not always mind you) once the herd is aware, the logical traders are exiting and beginning to position against the thin supply of buyers remaining. Just some food for thought.

Short USDJPY @ 93.65
Long EURUSD @ 1.2550
Short USDCHF @ 1.1740
Short USDCAD @ 1.2570 (Long Oil)
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  • #2
  • Feb 19, 2009 6:05am Feb 19, 2009 6:05am
Quoting DownRiverTrader
I am positioning for the dollar to begin weakening again. Sure it is not what you are reading on the right side of the board here with all the stories but that is exactly the point. Ask yourself a simple question, "Why am I buying the dollar?" It has been a story of..."Well armageddon and the dollar is the best of the worst"

I think the dollar play is wearing very thin personally. Look at a long term chart and you will see a secular downtrend in the dollar, no one can argue this. We are printing dollars like there is no tomorrow. Consider...
I see the same thing. With the new administration in office of the USA. I am not convinced that all the stimulus plans will be effective. I am afraid that the dollar will tank and inflation will kill us. But who am I. I am still proud to be an American!!!

Great post!!!!
  • #3
  • Feb 19, 2009 6:17am Feb 19, 2009 6:17am
I noticed you have been trading for a while, and I respect your expertise. If you don't mind how can I self educate myself to trade more effectively and precisely. I am open to advice and any suggestions.
Thanks in advance. I do really appreciate it

My intentions are not to skew this forum in any way. My apologize to all!
  • #4
  • Feb 19, 2009 6:25am Feb 19, 2009 6:25am
Quoting jphotdeals
I noticed you have been trading for a while, and I respect your expertise. If you don't mind how can I self educate myself to trade more effectively and precisely. I am open to advice and any suggestions.
Thanks in advance. I do really appreciate it

Trading is not like any business you have ever been involved in. Your question has no exact answer.

Unfortunately, it is trial by error. Said another way.... you will likely lose a lot of money figuring it out. We all did (are).

My advice would be to understand that you can not control most elements of you business. They simply are not controllable or predictable. Know that any opinion you have is just that.... an opinion and it will not necessarily put any equity in your trading account.

Trading is an incredible mind game. Especially operating alone in the world of big money from our little computer screens.

The books that are published on trading tactics are basically worthless in my opinion. Mind you I read a lot of them years ago.

You have to focus on the two things you can control. Yourself and your risk.
Work on your self. Become an expert at risk management. Profit is a by product.
  • #5
  • Feb 19, 2009 6:28am Feb 19, 2009 6:28am
very well said DRT
  • #6
  • Feb 19, 2009 6:32am Feb 19, 2009 6:32am
Quoting DownRiverTrader
Trading is not like any business you have ever been involved in. Your question has no exact answer.

Unfortunately, it is trial by error. Said another way.... you will likely lose a lot of money figuring it out. We all did (are).

My advice would be to understand that you can not control most elements of you business. They simply are not controllable or predictable. Know that any opinion you have is just that.... an opinion and it will not necessarily put any equity in your trading account.

Trading is an incredible mind game. Especially operating...

Thank you for your insight. It is highly appreciated!
  • #7
  • Feb 19, 2009 6:48am Feb 19, 2009 6:48am
Quoting jphotdeals
I see the same thing. With the new administration in office of the USA. I am not convinced that all the stimulus plans will be effective. I am afraid that the dollar will tank and inflation will kill us. But who am I. I am still proud to be an American!!!

Great post!!!!
Firstly, I want want to preface this by saying that I am a proud American, and I like Obama, but I think that he has been dumped with a problem that is simply too big.

I remember watching the live telecast of of Tim Geithner's speech and was completely UNDERwhelmed by this new Plan. Wall St tanked almost 400 pips on the day and the Forex pairs were surprisingly subdued.

There are three key points of the Geithner Plan;

Firstly, US Bank regulators will review capital levels of all Banks and conduct "stress tests". Hmmmm...This will rely on the Banks giving the Regulators full and honest information and details...Do I trust Wall St banks to give this information??? Not a chance !!!!!!! These are the same banks which have hidden all the problems and which have refused to even tell anyone what they did with the initial $350 Billion bailout Funds.. This part of the Plan is a PR exercise and will be a whitewash.

Secondly, The Govt lend "investors in securities" as much as a Trillion dollars for student, credit card, auto and commmercial mortgage loans. Guess who will be the "investors in securities" ??? Yep, you guessed it...the same old Wall St companies. So the Govt is giving them a Trillion dollars of taxpayers money to buy loans from themselves

Thirdly, the Govt will spend an initial $500 Billion- $1 Trillion to encourage "private investors" to acquire banks bad mortgages so that banks get to cleanse their balance shees while "private sector buyers" will determine the price for previously illiquid assets. Whoa...what a sucker job!!! Who are these "private investors"??? Yep, you guessed it again...they will be the same old Wall St banks picking up their own bad mortgages..at a price that they will decide on... but with $500 Billion-$1Trillion of taxpayers money.

I am sorry, but I think that this strategy is the greatest heist of all time. I say let the market sort it out...If the Wall St banks are broke, then let another bank buy them..If the stock price is too high then for anyone to buy them, then let the stock price fall to zero and let stronger international Banks take them over for the cost of their debt.(JP Morgan, HSBC and Standard Chartered could easily buy them).
Remember,the Wall St Banks are already insolvent...the ONLY thing holding their stock prices up is the government Bailout funds...If those funds were withheld, the Wall St Banks are worthless.
Alternatively, if still no-one wants to buy them, then nationalise them for 12 months, stabilise them with Govt guarantees, find all the skeletons that the banks have been hiding, fix them and then sell the Bank again to private stockholders. But get rid of the current executive teams in each of the banks.

How will this affect us as traders? Well, I think the economy is going to get much worse as people start to realise that this Plan will NOT work. But just as the Govt denied that we were in recession for 12 months after it was blatantly obvious that we were in a recession, the Govt will keep denying that we are heading into the deepest recession for at least 80 years...and maybe, just maybe.... even worse than the Depression of the 1930's. Thats the bad news.

The good news is that the BEST asset class to be in is.... currencies. All other asset classes, especially property and stocks, are falling with no real option of capitalising on those falls. (I am discounting Futures because I think that Forex is a "safer" market to be trading). Gold is a dubious option, as Gold is priced on the dubious assumption that one day we will be forced to go back on a Gold standard... And I don't believe that we will ever go there again.
We are extremely fortunate that we are all involved in, and are acquiring skills in, an asset class that allows us to maximise our assets by trading on the strengths and weaknesses of the two largest currencies in the world. And one thing that will never disappear is Money...One currency may change in value compared to other currencies but Money will always be in use everywhere in the world.
As the world is going through this crisis, now more than ever before, we are in the BEST business on the Planet.

Jacko


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  • #8
  • Feb 19, 2009 6:55am Feb 19, 2009 6:55am
Quoting jacko
Firstly, I want want to preface this by saying that I am a proud American, and I like Obama, but I think that he has been dumped with a problem that is simply too big.

I remember watching the live telecast of of Tim Geithner's speech and was completely UNDERwhelmed by this new Plan. Wall St tanked almost 400 pips on the day and the Forex pairs were surprisingly subdued.

There are three key points of the Geithner Plan;

Firstly, US Bank regulators will review capital levels of all Banks and conduct "stress tests". Hmmmm...This...
That is so true. I concur 100%
  • #9
  • Feb 19, 2009 7:31am Feb 19, 2009 7:31am
Quoting DownRiverTrader
... Look at a long term chart and you will see a secular downtrend in the dollar, no one can argue this...
DRT, good to see you around again.

Secular trend is still clearly down, it's amazing how a lot of people forget this.

Great post and spot on Jacko. Couldn't agree more.

Interesting times ahead that's for sure.
  • #10
  • Feb 20, 2009 12:42pm Feb 20, 2009 12:42pm
This is classic. See what I mean...


TOP STORIES
17:46 GMT EUR/USD: Everything But the Daily Reversal, As Usual
New York, February 20th. Varying stories are being told about the widespread sell-off in the USD after the London close, with some rumors of imminent US QE via Tsy buying and others writing it off to a grand stop-running exhibition from a forex market that has been...
  • #11
  • Feb 22, 2009 10:08am Feb 22, 2009 10:08am
DRT

May i ask ur opinion about my charts please.
First one from November and second one from today.

http://www.forexfactory.com/showthre...21#post2384921
http://www.forexfactory.com/showthre...13#post2556313

Thank u very much
  • #12
  • Feb 22, 2009 10:23am Feb 22, 2009 10:23am
Great analysis TS!

pop
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  • #13
  • Feb 22, 2009 10:30am Feb 22, 2009 10:30am
http://www.nowpublic.com/tech-biz/uk...s-way-out-debt

been try to find out when the government is going to start printing money

now we know - its short short short - all the way

hyperinflation and devaluation through printing money is a very very dangerous thing

last time they tried we did not all have the internet and access to fx trading systems - If everyone knows its bad and reacts as such - how bad do you think it can be!!

well the boe may as well start printing that 10 trillion pound note - NOW!!
  • #14
  • Feb 22, 2009 10:57am Feb 22, 2009 10:57am
Quoting DownRiverTrader
Short USDJPY @ 93.65
Long EURUSD @ 1.2550
Short USDCHF @ 1.1740
Short USDCAD @ 1.2570 (Long Oil)
Hi DRT
FIRST we miss your posts and your advice hope you will post more as soon as you can please, I'm sure it's usefull for many traders here and of course me.
I totally agree with you but my small capital control my options
and my tp -sl

Most of time i belive usd will sink but it's bullback , Do you Expecting it will in next few months , maybe by end of this year! " What ur vision"?

If USD fall what you expection for replacment currency will be?

Can i know what your target and SL for above positions?
  • #15
  • Feb 22, 2009 11:24am Feb 22, 2009 11:24am
well said Jacko
  • #16
  • Edited 11:42am Feb 22, 2009 11:39am | Edited 11:42am
To many are discounting the USD. I honestly do not see the euro stopping this side of 100, possibly lower. Call me crazy but it is in the euro and sterling's best interest for the $ to appreciate. Europe's in trouble - their banks are in as bad or worse shape than the US. The market sentiment right now is fear and that fear is going to manifest itself in an EU implosion if they are not carefull, and I do nto see the ECB as able to balance the needs of such a diverse organization.
I do not base this on USD streangth - but on Euro / Pound weakness.
In trading, there is no bullshit. You either make money or you don't.
  • #17
  • Feb 22, 2009 1:28pm Feb 22, 2009 1:28pm
Quoting 5ysfx
DRT

May i ask ur opinion about my charts please.
First one from November and second one from today.

http://www.forexfactory.com/showthre...21#post2384921
http://www.forexfactory.com/showthre...13#post2556313

Thank u very much

What exactly are you asking me to comment on?
  • #18
  • Feb 22, 2009 1:42pm Feb 22, 2009 1:42pm
Quoting DownRiverTrader
What exactly are you asking me to comment on?

1)Do u think we had just started long term downtrend continuation last friday.

Simple yes or no.
  • #19
  • Feb 22, 2009 2:29pm Feb 22, 2009 2:29pm
Quoting egkid
Hi DRT
FIRST we miss your posts and your advice hope you will post more as soon as you can please, I'm sure it's usefull for many traders here and of course me.
I totally agree with you but my small capital control my options
and my tp -sl

Most of time i belive usd will sink but it's bullback , Do you Expecting it will in next few months , maybe by end of this year! " What ur vision"?

If USD fall what you expection for replacment currency will be?

Can i know what your target and SL for above positions?
If you have small capital, focus on your position sizing. You can't force the market. This is learned a long time ago. It is what it is and you have no control over it.

Like I said....an opinion is just an opinion. Pretty worthless for creating wealth. I don't have any idea where the USD is going over the next few months. Nobody does. Regardless of what some may claim, it is just that a claim.

When I trade, I try to use common sense. So I ask myself....where are we right NOW.

 

  1. Lots of USD supply is coming to the market
  2. The US is facing 10% unemployment
  3. We are still in a long term secular downtrend and I think the worse is yet to come.
  4. Housing, Credit, etc. etc. etc.
  5. Govt interventions have rarely (maybe never) worked.

I think what we saw on Friday after the Euro close was major players positioning for dollar weakness ahead. It may have been an abberation, but I don't think so. It was broad and timed. Let's not forget that the US markets still have a lions share of World volume in dollar terms. I may be wrong, and if I am then I will re-evaluate. I do feel some degree of validation in that the market reacted like I expected. Timing is always the equity killer. You can be correct in your view, but your timing will break you.

So.... trust in your self. Trade within your means and realize that you have no way of actually knowing where the market is heading in the next few months.

All you have to do is think back to what all the experts were saying just a few months ago.... Euro will become new world currency, oil at $200, commodities can't fail because of supply/demand imbalances, etc. etc. What the experts think is really meaningless, it just marketable hype that plays on those not willing to use their own mind and trust in it.

  • #20
  • Feb 22, 2009 2:31pm Feb 22, 2009 2:31pm
Quoting 5ysfx
1)Do u think we had just started long term downtrend continuation last friday.

Simple yes or no.
My guess = yes.
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