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EurAnalysis Kindergarten 24 replies

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  • #63,461
  • Dec 14, 2012 1:36pm Dec 14, 2012 1:36pm
Quoting PipTrapper
My view...

Despite the recent rallies in Cable, Aussie, Euro and Cad, all these currencies are extremely overvalued from a macro-economic perspective. The only question now is how far the pendulum is going to swing in the wrong direction before the market embraces reality and trades accordingly. I think that time is very near. As Sisse pointed out earlier, once the fiscal cliff issue is out of the way, things should return to normal.
Holding and adding to your positions fits your trading style which makes this an interesting opportunity. Others seem to get frustrated and face the choice of cutting losses and preserving their capital... Or stay biased.
The latter is the hard choice a fundamental trader needs to consider. However the techie will probably pick the former and go long? Re-enter short at higher levels?
Then this would depend on the timeframe I presume
  • #63,462
  • Dec 14, 2012 1:38pm Dec 14, 2012 1:38pm
Quoting PipTrapper
My view...

Despite the recent rallies in Cable, Aussie, Euro and Cad, all these currencies are extremely overvalued from a macro-economic perspective. The only question now is how far the pendulum is going to swing in the wrong direction before the market embraces reality and trades accordingly. I think that time is very near. As Sisse pointed out earlier, once the fiscal cliff issue is out of the way, things should return to normal.
Yep, I am sure time will tell and we go in normal sence but how many good traders fixed their losses or still holding underwater (as me((() this week very bad, sad
Take care all
  • #63,463
  • Dec 14, 2012 1:40pm Dec 14, 2012 1:40pm
Quoting PipTrapper
My view...

Despite the recent rallies in Cable, Aussie, Euro and Cad, all these currencies are extremely overvalued from a macro-economic perspective. The only question now is how far the pendulum is going to swing in the wrong direction before the market embraces reality and trades accordingly. I think that time is very near. As Sisse pointed out earlier, once the fiscal cliff issue is out of the way, things should return to normal.
I agree. Donīt forget NZDUSD. The mother of all overbought pairs. I started shorting it at the Bernanke top on Wednesday. Currently BE.
Observation is the path to discovery.
  • #63,464
  • Dec 14, 2012 1:48pm Dec 14, 2012 1:48pm
On the Fiscal Cliff issue...how would you like to find a solution for this? What comes of this will provide a more 'confirmed' direction on the short term at least.
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  • #63,465
  • Dec 14, 2012 2:02pm Dec 14, 2012 2:02pm
Quoting PipTrapper
My view...

Despite the recent rallies in Cable, Aussie, Euro and Cad, all these currencies are extremely overvalued from a macro-economic perspective. The only question now is how far the pendulum is going to swing in the wrong direction before the market embraces reality and trades accordingly. I think that time is very near. As Sisse pointed out earlier, once the fiscal cliff issue is out of the way, things should return to normal.
Hello PT
When you say that the majors are overvalued form a macro perspective, where do you see fair value and how do you assess it exactly? Thx in advance for your reply
  • #63,466
  • Dec 14, 2012 2:16pm Dec 14, 2012 2:16pm
Quoting Alorente
I agree. Tiny leverage doesnīt get you far. Leverage is like a custom made suit. It has to fit your character as well as your trading style. My comfort zone is 50:1
u mean 1:50 or 50:1 lol if its the first case then ur a gambler sir.otherwise ur a investor regards
Allah has permitted trade and has forbidden interest [koran]
  • #63,467
  • Dec 14, 2012 2:20pm Dec 14, 2012 2:20pm
Quoting PipTrapper
My view...

Despite the recent rallies in Cable, Aussie, Euro and Cad, all these currencies are extremely overvalued from a macro-economic perspective. The only question now is how far the pendulum is going to swing in the wrong direction before the market embraces reality and trades accordingly. I think that time is very near. As Sisse pointed out earlier, once the fiscal cliff issue is out of the way, things should return to normal.
Whilst some of us in this room may have a predisposed "fundamental view" of the market... if the trend (or market bias) says otherwise then
We must respect that.

They say the tape never lies however there is a variation on that... he might not be telling the full truth either!
Inflation in things we need, Deflation in things we want.
  • #63,468
  • Dec 14, 2012 2:28pm Dec 14, 2012 2:28pm
Quoting PipTrapper
The argument is not "Tiny leverage", but rather a "scale-in" approach with tiny leverage positions working up to your full load.
dont u think that approach is a double edge sword and in wrong hands can cuts one own throat.regard.

i do practice it by the way.
Allah has permitted trade and has forbidden interest [koran]
  • #63,469
  • Dec 14, 2012 2:35pm Dec 14, 2012 2:35pm
Quoting ez0770
Hello PT
When you say that the majors are overvalued form a macro perspective, where do you see fair value and how do you assess it exactly? Thx in advance for your reply
The answer to your question is a complex one as it involves risk premia and potential yield analysis based on political, fiscal, economic and monetary factors. However, just from a simple perspective, all one has to do is compare current and projected economic factors such as unemployment rates, GDP growth (or in some cases, contraction) and general investor, business and consumer confidence metrics with the past economic factors. Once you've looked at the data, then look at the exchange rate comparison between then and now.

Applying that analysis to the Australian Dollar and the US Dollar, over the last 6 months, The Australian economy has fallen way behind the US in current (as well as projected) economic performance, yet the AUD is worth more today than it was then. The same applies to the British Pound. Also the Euro, but I shall exclude that from this analysis because the rout to 1.20 was based more on the credit crisis and bond market rout rather than economic performance at the time. However, looking forward to projected economic performance, the US Dollar should outperform the Euro.

I'm not going to post all the data here for two reasons. First of all, I don't have it all compiled in a format that will fit here. Secondly the data is readily available to you in the FF calendar anyway. All you have to do is look.

Example of what you can get from the FF calendar:
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Click to Enlarge Name: AUDGDP1.jpeg Size: 22 KB

Attached Image (click to enlarge)
Click to Enlarge Name: USDGDP1.jpeg Size: 21 KB
Those who say it cannot be done should not interrupt those who are doing it
  • #63,470
  • Dec 14, 2012 2:40pm Dec 14, 2012 2:40pm
Quoting PipTrapper
Same here, but I am short from many levels starting from as high as 1.4647 to as low at 1.2213. I have already taken partial profits many times over the course of the last 18 months from almost all the levels (some of them multiple times).

Anyway, my break even on the remaining floating trades is at around 1.3275 area (depending on swap and spread) and I will stop out all my trades if we hit that level. So for me there is no money at risk, but it would be a real b**ch of a waste of 5 months of my time if I have to capitulate now. Therefore I...
wow,ur the master PT.when u initiate positon what is the leverage u use?i can see ur a consistent bear,which i think is the right approach,i mean being consistent in being either bear or bull otherwise one will become pig.regards
Allah has permitted trade and has forbidden interest [koran]
  • #63,471
  • Dec 14, 2012 2:40pm Dec 14, 2012 2:40pm
ZH on today's foolishness

http://www.zerohedge.com/news/2012-1...ks-lag-weekend
Trade smaller than rational because the market is irrational...
  • #63,472
  • Dec 14, 2012 2:41pm Dec 14, 2012 2:41pm
Quoting drzakir123
dont u think that approach is a double edge sword and in wrong hands can cuts one own throat.regard.

i do practice it by the way.
Double edge sword? No

However, it can cut you if you don't use if safely.
The idea is more so to scale in to winning positions, but it can also be used to average in to losing trades... As long as you know your limit and don't let your bias force you over it, you'll not only survive, but you'll actually come out with a bigger profit than if you scale in to winners.

low risk = low gain
high risk = high gain
Pay peanuts = get monkeys

That's the way the world turns.
Those who say it cannot be done should not interrupt those who are doing it
  • #63,473
  • Dec 14, 2012 2:58pm Dec 14, 2012 2:58pm
Quoting EuroTraderJD
ZH on today's foolishness

http://www.zerohedge.com/news/2012-1...ks-lag-weekend
I see they are just as puzzled as we are
Those who say it cannot be done should not interrupt those who are doing it
  • #63,474
  • Dec 14, 2012 3:06pm Dec 14, 2012 3:06pm
Honest to God PT. This is beyond stupid. Possible some repatriation with a little Ben mixed in. Algos and a thin market act like a moving object in deep space....

Waiting for all those funds who went long to unwind any handle level now.

Does it hurt more if I fall from 135 stories or less if I fall from 131
Trade smaller than rational because the market is irrational...
  • #63,475
  • Dec 14, 2012 3:09pm Dec 14, 2012 3:09pm
Quoting EuroTraderJD

Does it hurt more if I fall from 135 stories or less if I fall from 131
Euro puts Spiderman to shame.
Trade smaller than rational because the market is irrational...
  • #63,476
  • Dec 14, 2012 3:53pm Dec 14, 2012 3:53pm
Quoting EuroTraderJD
Euro puts Spiderman to shame.
Ever since NASA discontinued the space shuttle program, Europe has been trying to get to space on their own.. I just never thought they would send the Euro up first. I figured maybe a monkey LOL
Those who say it cannot be done should not interrupt those who are doing it
  • #63,477
  • Dec 14, 2012 4:01pm Dec 14, 2012 4:01pm
Quoting PipTrapper
Ever since NASA discontinued the space shuttle program, Europe has been trying to get to space on their own.. I just never thought they would send the Euro up first. I figured maybe a monkey LOL
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  • #63,478
  • Edited 4:27pm Dec 14, 2012 4:08pm | Edited 4:27pm
Quoting msood
not at all - wouldn't put anything past this pair - its quite stubborn and illogical. but i would like it to meet my low side weekly projection! so i am kind of biased...and hoping...
Well, well, well! I fall asleep and look what happens

Someone mentioned in a recent post (think it was PT) how price is attracted to large orders - it seems to be at play here: now big boys want to sell, but they want to do at premium, so price is driven higher despite all news. Will look to short again next week if opportunity presents...otherwise ride my short till parity -
  • #63,479
  • Dec 14, 2012 4:17pm Dec 14, 2012 4:17pm
I get the gut feeling that the fiscal cliff will be resolved over the weekend
  • #63,480
  • Dec 14, 2012 4:24pm Dec 14, 2012 4:24pm
This bear correction in USDX must end between 78.50/80 then bull will continue to 86/90
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Stocktwit: LuisCarlos - twitter: @lcparodi
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