If there was easy money lying around,no one would be forcing it into your
- #24,101
- Mar 12, 2012 11:03am Mar 12, 2012 11:03am
- | Membership Revoked | Joined Aug 2011 | 7,263 Posts
- #24,103
- Mar 12, 2012 11:23am Mar 12, 2012 11:23am
Ahhh. My old friend is back. I thought you gave up Forex and started chasing teenage girls hehehe
http://www.virgrin.com/FetchImages/h...1303729323.jpg
I've seen you write several times that your long term target is 1.17.. I did the calculations and at current interest rates over a two year period it gives the eur/usd a value of 1.17 or there abouts, cet par obviously..
- #24,105
- Mar 12, 2012 11:50am Mar 12, 2012 11:50am
- Joined Aug 2008 | Status: Persist Until Something Happens | 17,898 Posts
Pt I have a quick question for you.. Do you use interest parity condition when speculating long term currency movements..
I've seen you write several times that your long term target is 1.17.. I did the calculations and at current interest rates over a two year period it gives the eur/usd a value of 1.17 or there abouts, cet par obviously..
First of all, I realized many years ago that when there is very little (less than 1%) rate differential between domestic rates and foreign rates, due to the difference between rates paid on deposit and rates charged for borrowing, the rate differential is effectively at parity or worse (costs the same or more to borrow than one would earn through the rate differential). Therefore, it is only natural that over time, as foreign invested instruments mature, the realized capital will be repatriated to the US (economic conditions being equal or US favorable)
Therefore in light of the improving economic situation in the US and the uncertainty in the EZ, plus the anticipation that the ECB still has to cut rates to achieve their price stability mandate, there is an even grater tendency for US investors to repatriate capital and invest in US domestic securities / commodities.
Of course that doesn't tell me what price to target. So, how did I arrive at the 1.17 figure?
You've seen it before, but I'll show you again. Where is the 161.8% Fibonacci line of the move from point C to point D for the Gartley pattern on the monthly chart?
Those who say it cannot be done should not interrupt those who are doing it
- #24,106
- Mar 12, 2012 12:21pm Mar 12, 2012 12:21pm
I'm familiar with the concept and I did take it into consideration when mentioning my forecast of 1.17... However, I did not reach the 1.17 forecast by calculating it as you did.
First of all, I realized many years ago that when there is very little (less than 1%) rate differential between domestic rates and foreign rates, due to the difference between rates paid on deposit and rates charged for borrowing, the rate differential is effectively at parity or worse (costs the same or more to borrow than one would earn through the rate differential)....
I believe though given the current situation, the 1.17 target is a little underestimated. Although QE is always a possibility I think we're at the point where it will have little affect at this stage. I don't think a devaluation at this stage will do anything exceptional for a growing economy its now the time to reduce the money supply. As such I believe that an increase in US interest rates will occur this year maybe to .2-.35%. I don't have to tell you what this means for dollar denominated assets. So with a strengthening dollar and the increasing possibilty of a rate reduction by the ECB it would seem to give the euro a value of somewhere around 1.13-1.15. These calculations are done over a two year period. This may indeed be the highest we'll see the euro at for a long time.
I was told an important piece of advice which I feel when making long term calls on currencies is something everyone should be aware of. The main purpose of the foreign exchange market is not to make money but to do day to day transactions. With that in mind I like to use economic analysis when making long term calls as companies, in my view, dont care about technicals maybe a bit of fundamentals but I believe they use calculations above all else..
So I thank you for detailed response, never a question asked that hasn't been answered to the highest of quality
- #24,107
- Mar 12, 2012 12:26pm Mar 12, 2012 12:26pm
- | Joined Nov 2011 | Status: Trader | 2,104 Posts
Too old for chasing pussy... got it couple of times. Once pussy gets predictable it's getting boring. It would be more interesting if you would chase different pussy everytime?
I observe your reality but live my own. 
- #24,108
- Mar 12, 2012 12:33pm Mar 12, 2012 12:33pm
- | Joined Nov 2011 | Status: Trader | 2,104 Posts
I observe your reality but live my own.
I'm familiar with the concept and I did take it into consideration when mentioning my forecast of 1.17... However, I did not reach the 1.17 forecast by calculating it as you did.
First of all, I realized many years ago that when there is very little (less than 1%) rate differential between domestic rates and foreign rates, due to the difference between rates paid on deposit and rates charged for borrowing, the rate differential is effectively at parity or worse (costs the same or more to borrow than one would earn through the rate differential)....
Yea no problem its something called interest parity condition.
It involves using current interest rates to calculate future exchange rates between to countries.
The formula is: E=(1+it)^n/(1+it)^n
So for instance the ECB rate is 1% and the fed's interest rate is .10%. If we let n=2, (over the next two years rate will remain at these levels)
So we say 1^2/1.1^2
=.082644. So what that means is that 1 euro=82cent so translating that to the eur/usd pairing =1.1735.
This of course is open to fluctuations, any country that operates a flexible...
Bulls Run. Bears Bite. We Profit.
- #24,113
- Mar 12, 2012 4:54pm Mar 12, 2012 4:54pm
- | Membership Revoked | Joined Aug 2011 | 7,263 Posts
If there was easy money lying around,no one would be forcing it into your
- #24,114
- Mar 12, 2012 5:07pm Mar 12, 2012 5:07pm
- Joined Jun 2009 | Status: Carry Trader that not want interest | 2,016 Posts
Good Morning,
Trying long @ 1.3160 Stop @ 1.3078 Risk 1% TP : Open
Bismillah
- #24,115
- Mar 12, 2012 5:16pm Mar 12, 2012 5:16pm
- | Membership Revoked | Joined Aug 2011 | 7,263 Posts
gud moning..hehe huhu haha hoho
If there was easy money lying around,no one would be forcing it into your
- #24,116
- Mar 12, 2012 5:19pm Mar 12, 2012 5:19pm
- Joined Jun 2009 | Status: Carry Trader that not want interest | 2,016 Posts
Lolz,where are you going these days krun krun,rarely post now since miss your huhuhu so much
Bismillah
- #24,117
- Mar 12, 2012 6:18pm Mar 12, 2012 6:18pm
- | Membership Revoked | Joined Aug 2011 | 7,263 Posts
i have class la....im final year n final sem......very busy with my asignment project...haha
If there was easy money lying around,no one would be forcing it into your
- #24,118
- Mar 12, 2012 6:59pm Mar 12, 2012 6:59pm
- | Joined Nov 2011 | Status: Trader | 2,104 Posts
First target of 1.3162 reached, we've tried twice to break weekly pivot and failed, closed long at 1.3168 for +41
I think it's back to at least the new daily pivot at 1.3139 and then 1.3124 (back to where I started this morning). But right now it's now bed time for me and I don't want to carry the trade overnight. There's always pips to be had of you look at the charts
I think it's back to at least the new daily pivot at 1.3139 and then 1.3124 (back to where I started this morning). But right now it's now bed time for me and I don't want to carry the trade overnight. There's always pips to be had of you look at the charts
I observe your reality but live my own.
- #24,119
- Mar 12, 2012 7:12pm Mar 12, 2012 7:12pm
I can't really teach it as I would here forever.
The road to pipland is arduous and fraught with challenge.
- #24,120
- Mar 12, 2012 7:49pm Mar 12, 2012 7:49pm
- | Additional Username | Joined Oct 2011 | 2,098 Posts