Buy AUDJPY On Dips?

It's very plausible that the RBA (Reserve Bank of Australia) has started the slow process of moving interest rates from emergency levels to normal.RBA Starts Rate RisesWe'll want to see what happens over the next couple of months in order to confirm this analysis. However, from now on whenever the markets are panicked about the latest downward surprise, it might be time to dip your toes in.We're

Long Term Carry Trade Fundamentals

While reading a recent CNBC article about current events something clicked for me.Here is the passage:The dollar rose broadly on Thursday as yields on 10-year U.S. government bonds jumped more than 50 basis points in the last two weeks, drawing Japanese investors into overseas assets like global semi-conductor stocks, banks and U.S. junk bonds, according to Reuters.Do you remember the massive

Forex Tips - Microtrading

The AUDJPY currency pair is currently trading around the 76.00 mark.Over the last twenty days, from May 7 through May 27, I've been experimenting with a concept I've been calling microtrading.I don't intend to close all of my positions at the moment, but if I did my account NAV would increase by more than 10% over that period.While I realize that active trading can return spectacular results

Theory: Trading With Little To No Margin

As I often do, especially when the markets are excruciatingly slow in determining when to make the next significant move, I've been thinking about Forex.Take a mental walk with me...The DOW falls from 10,000 to 5,0000 and loses 50% of it's value. It returns from 5,000 to 10,000 and gains 100% of it's value.Wait, think about that for a minute. In the normal world having the ability to gain

MT4 EA: Average Position Based Trading

While I don't have any pictures to show, yet, I am working on an EA that trades AUDJPY based on the market price relative to the average price of positions held.The first few passes at this type of system were pitiful. My testing starts from September of last year to now while only opening long positions. As you can imagine this is a difficult period of time for a long only system!However, late

Catching The Run To 71.00

Did you ride the recent run in the AUDJPY to 71?I was lucky enough to grab and hold a chunk at 65.62 and I'm pondering whether or not I want to let it go.We've just had a double top on the 15 minute chart. The 1 hour is oversold. I think we are going to get some bounces upward due to exuberance, but it seems about time for a pullback.I've sold off the nibbles I also acquired on the way up. I

Market Rationality?

With some major changes happening on a global basis it's just possible that the forex markets will return to rationality.For example, the Yen crosses (the carry trades) have been taking off like a shot today. I know I've been mooing about a possible bottom here and there in the face of mass panic and extreme volatility as indicated by the VIX.Was that it?I hope so, but at the same time there is

Carry Trade Musings

Did you see the carry trades collapse today?Neither did I.In fact, things looked downright orderly. Nay, they looked rational. Is this a trick or have all the truly skittish abandon ship at this point?Be warned, I'm almost always too quick to look past current issues, discounting the ability of the current situation to cause additional convulsions before passing. However, with that said, I'm

Seeing Beyond The Bailout

Now that the US bailout package has been passed the question on everyone's mind is what happens next?Nobody knows. Conversely, everyone knows!Once the question of government action has been answered we know that the currency markets will move either up or down. Basically, the only time they are in near stasis is when speculators and investors need the next piece of information in order to

Forex Market Deconstruction

Now that the trading week is over I thought I'd write about a few things that came to mind over the last couple of days.Current SituationEveryone is expecting the Fed to come along and put a multi-hundred billion dollar package together with the help of congress. Obviously, this is relieving a lot of the unprecedented pressure on both stocks and various Forex markets. The only fly in the

Market Panic To Market Euphoria?

I'm not certain that euphoria is any wiser than panic, but I do know that the Forex world has changed.The Fed, Congress and the Senate were meeting earlier this evening and are putting together what is touted to be a comprehensive plan to solve the ongoing financial crisis. Basically, by creating an organization to buy and then auction off troubled assets, the fear and uncertainty in the markets

Long Term Carry Trade Prognosis

With the temporary loan facility made available to AIG by the Fed it seems that the currency markets are getting back a bit more appetite for risk.The Yen has been dropping and carry trade pairs have floated erratically to more respectable levels. The real question is how the US markets will react tomorrow. I'm expecting the equity markets, the DOW, to do well but I don't know if the carry

Forex Carry Trade Bottom?

I'm probably never going to try to call a bottom, but I will point out that there is a difference in behavior since the recent panic drop. Now, we see the Yen based carry pairs bouncing off a resistance point instead of simply dropping as if they are in free-fall.What am I doing about it?I'm glad you asked. My current trading activity involves playing with a bit of a gridding strategy. When

Carry Trade Panic Selling?

Did anyone notice the panic selling out there?All kinds of carry trades unwound several hundred points in a very short period of time. Speculation in the Forex news rags suggests that losses due to the falling stock exchanges forced people to unwind their carry trades to cover their margins.In any case, after days of regimented downward movement, the sudden fallout represented a panic moment --

Carry Trade Accumulation Strategy

As I haven't seen this forex tactic expressed anywhere else I thought I'd blog about it and share it with my small readership.Are you familiar with trailing stops?This is when you set a stop loss some number of points below the current price and then allow that stop loss to float when the price moves in a profitable direction. Well, I'm not going to talk about stop losses, but the idea is

Carry Trading Thoughts

Today's post is basically a bit of mental exercise concerning accumulating carry trades. If you are looking for serious advice, this post probably isn't it.Anyway, for the two or three people that do follow along, you know that I like carry trading. For today's exercise, let's consider the GBPJPY. Looking at the five year chart on Google finance we can see an absolute range of approximately

Forex Turmoil: Still On The Sidelines

During the last few weeks of topsy-turvy price movements I've been playing it safe. I like to buy carry trade pairs, but they've been heading down a lot.Now, the big question, when will things start to turn around? A few of the pairs are getting into historically low valuations. For example, take a look at the GBPJPY pair on google finance -- click the 5yr option when it loads.Sure, we could

Trading The EUR/AUD

I've spent the better part of a year focusing my attention on the AUD/JPY. I think it's time to start looking into other pairs...Last week I started trading (shorting) the EURAUD.The EURAUD is another pair suitable for the carry trade. [For you beginners, some currency pairs earn interest while you hold them. Those that do allow you to participate in the so-called carry trade. See my recent

Kramer's Bottom Call

I take heart in the fact that Kramer has called a bottom.Although there is a lot of volatility I am hoping that over time I'll be able to build and protect a sizable AUDJPY position. You see, as you get positions in profit and place stop losses in to protect them, you get to start again with respect to risk. Also, as the profits rise, you can start to get positions that are funded by locked in

Fundamental Forex Guesswork

Okay, so during the NY trading session today I did manage to get some AUDJPY positions protected under a stop loss.What I'm hoping, and I'll try to convince myself via fundamental issues, is that the foreign markets will rise based on US news. You see, the US economy came out luke warm today. Inflation didn't seem to be a big issue and various sectors were weak, but nothing was