Thursday, July 14, 2011


Folks, it is getting ugly. At 5 pm Moody's found out that Obama walked out of the debt negotiation meeting and decided that is all they needed to put US debt on review for downgrade. 5 pm is the least liquid time for Forex. Yours truly witnessed the outcome as it happened. No harm done, I had no positions on. But if one wanted to trade, it was impossible to get filled at a good price, or do anything that made any sense. So the conclusion is if you do not lose any money by not having positions on, you in fact made money by saving and preserving it. I already said in my earlier posts, traders do not trade all the time, but only when there is a trade. Stay flat in uncertainties, stay flat when stuff makes no sense, stay flat when you can't be at your screen to react or make an educated decision. Stay flat and safe, RISK OFF.
CHF, Gold and JPY - the usual risk off beneficiaries are getting a bid. Something is just not right though, USD and Treasuries are supposed to get a bid during risk off as well. But with downgrade looming, USD and Treasuries are going to get sold off, artificially propping up Euro, Cable, Loonie, Ozz, and Kiwi which all usually get sold off during risk off times. We are going to get some moves that make no sense. Will you know what to do? If the answer is NO, then stay flat. Should you decide to trade, you should risk a very small portion of your acc to trade in times like these, meaning your position size will be a fraction of your usual one. Tight stops and limit only orders are a must. Fast execution trading platform, multiple accounts for backup, with extra funds for higher margins, which get raised during volatile times, are a must as well.
That said, all this risk off will create some outstanding bargains. Be prepared, "black swan" - end of the financial world perception opportunity comes very seldom. Short the heck out of it when it goes down, and buy it back on the cheap once it bottoms. I can smell it coming, I am salivating!

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