Morning All, hope everyone had a good weekend.
The summer doldrums continue! There are slim pickings about on the currency markets at the moment, although the stock indices were lively last week.
I'm going to continue to keep an eye on
EUR/USD short but I'm not expecting much movement, to be honest. The markets are caught up in all this Fed tapering speculation which is causing some unusual moves across asset classes. Until some consensus is reached in relation to what is going on we are likely to see more chop. The German election is another thing to keep an eye on too, especially for the €.
Have you ever read the book
"Bringing Down the House", or the film that was made of the story,
"21"? The book is better than the film. MIT blackjack players in Vegas. One of the keys to their success was knowing to conserve capital when the cards were not coming out in their favour, and then when the deck turned hot, they hit it as hard as they could, raising their stakes dramatically. Reading that book nearly 10 years ago now, I didn't know it at the time, but I was learning one of the most important trading lessons there is.
During these summer weeks, the markets are the equivalent of twos, threes or fours coming out of a blackjack deck. The inexperienced player who is in Vegas for the weekend will get annoyed, impatient and will bet on hands when the odds are obviously against him. He has no understanding of odds or maths and will lose his money. But that is what he is there for, so no worries.
The intelligent calculated MIT blackjack player will sit these hands out, or play low stakes, patiently biding his time. When the aces, kings and queens start coming out, he ramps up his bet substantially, knowing that the odds have swung in his favour and he has a limited time to get to work. He hits the deck as hard as he can, for as long as he can, until the odds swing back against him again. At which point he leaves the table and cashes out with enormous gains.
Don't be the drunken holiday stag party-goer in Vegas, losing all his cash and lying about it to his friends. Be the MIT blackjack player - patient, calculated, and above all, highly profitable.
Right now, as traders, we are at the market equivalent of sitting at a quiet blackjack table in Vegas - the cards that are coming out are low - twos, threes and fours. We are spending a few pips here and there, testing the market, but we recognise that it is quiet. We patiently wait for the a run of kings, aces and queens, and make sure that when that run comes, we are still sitting at the table with money available to put to work - not lying upstairs in bed bemoaning our huge losses.
For what it's worth, I am currently holding 5 positions, all short - 2 in USD/JPY and 3 in EUR/AUD. All stops are set to breakeven. Open floating profit is 1,456 pips. As I said earlier, I continue to track EUR/USD to the downside but I wouldn't be surprised to see strength, in which case I will stand aside and wait until the odds are in my favour again.
Good luck for the coming trading week!
