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    by Published on 07-21-2011 04:49 PM     Number of Views: 790 
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    2. US Dollar

    Lessons in TradingĖIs it Deception
    or Are Traders Just Puking Out?
    There is only one rule you will ever need to remember that has been your experience time and again. To have a chance, enter the trade only when the market goes to where you didn't think it could go in a million years (it will go there!). Yet don't trade against the overall arching theme since it will catch up to you eventually if you do.

    Markets move where you donít expect because when it moves in that direction it causes people to puke-out which extenuates the move. Whether or not this is deception perpetrated by Wall Street to try to make markets move in unexpected and seemingly illogical ways to cause people to puke out that then aids in moving the markets in the direction Wall Street is pumping, the fact remains it happens and must be accounted for. And there is only one way to account for it, to wait until the move has been spent where you say to yourself, I can't believe the markets just went there. Even when you do this it is hard to put the trade in because it goes against your feelings as your feeling simmer based on the preceding trend.

    The news on TV is for the last person to know so that information is really not very useful. Reading profusely might work (itís something different) since most people don't read to this extent. But really who has the time? So this is not a realistic option.

    When you do play the counter move, only try for a couple hundred pips (for a 50% to 100% return with options). Trading on margin is deadly because a person rarely is strong enough not to close out his trade when he is in panic mode as the margin call draws near.

    Your feelings reflect the mass market that is always wrong (who have the least amount of information). It feels so comfortable to trade a losing trade because everyone is with you. It's all over the news so we are blinded by other options than what we are told on TV. You have to trade against your feelings which is impossible to do. It goes against human nature. Therefore, all you can do is wait for the market to get to that extreme price point you didn't think could happen then enter the trade. This takes great patience because it might take months before the opportunity sets itself to trade it the other way. Even then the move could extend itself beyond the shock factor it has already generated. You are lucky to find one good opportunity per year in some stock, commodity or currency. Even though nothing is really noise, for our purposes it's noise and untradeable until it sets itself to meet your surprise factor.

    I would still have $20,000 if I didn't trade at all. Iíd be better off today not trading at all; this shows me how rarely one should trade and how small the pips of profit should be. When I get $5,000 to trade again after saving up from working, only take small chunks of profit-quick 50% to 100% gains. Take your profits and run! Beyond that is all a crap shoot.

    When you are so convinced in something, it wonít happen because likely most everyone believes the same already; or it certainly wonít happen when you are expecting it to. Wall Street will not give you that luxury! Ten predictions by ten people and the market will find some way to do that which makes them all wrong. The marketes are trying to maneuver themselves around peoples' already invested positions. It is new money that drives the market, or new money as a result of liquidating a position.

    In summary: the only option I see is to WAIT FOR and REACT TO surprising unexpected moves instead of getting burned by them. Thatís my definite experience. Never forget these words!

    If you trade this way, you will become no friend to Wall Street.
    The solution to the problems I have been experiencing can only be solved two ways:

    1) Wait for an extreme unexpected move like DX down from 76.72 to 73.88 in July, 2011.
    2) Read profusely to have a feel for the fact the day before the European draft to give periphery countries more money was going to be received positively.

    The problem is I canít read that much or that fast. I can only read as fast as I can, plus it takes away from my spiritual life. So I can do 1 and only try to do 2.
    by Published on 07-04-2011 04:09 PM     Number of Views: 854 
    1. Categories:
    2. US Dollar

    Based on liquidity demand, the US Dollar is going to 80 before rolling over. As you can see the Dollar has to play catchup with liquidity needs. Rising liquidity demand is a risk-off trade. Since the Dollar is so highly negatively correlated to the equity markets, we would expect over the next month the S&P 500 to head down below 1250 before heading back up to 1400 by the end of the year.

    ECB rate expectations are coming down dramatically even with the rate hike in July that is sure to occur. This will cause the Dollar to go up.

    What should concern everyone is rates for Greece, Ireland, Portugal, Spain and Italy are still quite high, indicating the problem still exists as they kick the can down the road. If Greece were to go bankrupt NOW with structural reforms this would strengthen the Euro, but they are just making the problem worse, because they are incapable of enough austerity to prevent bankruptcy, so bankrupting on a larger amount of debt later is far worse and problematic than going bankrupt now. As the debt piles on, inefficiencies mount.