It has been a long wait this time. But, finally it looks like a little reversal in our favour is happening right now.
Note that whether the equity on the left column is up or down this 9.1k account is now earning at the level of $17,503. At 9.5% margin that is about $1662 times 400 (400 to 1 leverage) or $665,114 USD that we are controlling and getting DAILY interest on.
PLUS, there is the buy low and sell high profit taking that goes on while the market is swinging up and down.
This may not be a bad time to go live. That is is not advice. Just a thought!
Wednesday, November 28, 2007
Monday, November 26, 2007
When the Hedge is Against You
When you hedge currency pairs you will always be in an upswing or a downswing at any given time. Sometimes the upswings or downswings are shortlived. Sometimes they go on for a long time. The present downswing is the longest I have seen in two years of hedging the market using the FreedomRocks system.
Some people ask me if this is normal. All I can say is there is nothing really 'normal' about the FX markets. They go up and down in predictable and unpredictable ways. If we always knew the direction markets would take we might as well directional trade as we would always know the direction of the market.
In hedging it is the hedge being against us or for us that gives us those great equity swings. If we want to get the windfalls, we have to suffer the drawdowns. It is just the nature of the beast.
Now that we are in a drawdown period I would keep a close watch on things. At some point it will turn around. That is the time to be in with live money as you will gain considerably on the upswing which will help to insulate you well for the next downswing and all the while you will be buying low and selling high and earning daily interest.
Some people ask me if this is normal. All I can say is there is nothing really 'normal' about the FX markets. They go up and down in predictable and unpredictable ways. If we always knew the direction markets would take we might as well directional trade as we would always know the direction of the market.
In hedging it is the hedge being against us or for us that gives us those great equity swings. If we want to get the windfalls, we have to suffer the drawdowns. It is just the nature of the beast.
Now that we are in a drawdown period I would keep a close watch on things. At some point it will turn around. That is the time to be in with live money as you will gain considerably on the upswing which will help to insulate you well for the next downswing and all the while you will be buying low and selling high and earning daily interest.
Thursday, November 15, 2007
Monster Pips- Inverse Hedge Training
Here is a site that discusses how to maximize profits by using good entry and exit timing.
Monster Pips- Inverse Hedge Training
https://paydotcom.com/r/18388/forexcoach/2198550/
I will add this link to the blog link list.
Monster Pips- Inverse Hedge Training
https://paydotcom.com/r/18388/forexcoach/2198550/
I will add this link to the blog link list.
Friday, November 9, 2007
What Goes UP....Comes Down
Well, this has been an interesting time.
The USD has been seeing all time lows against all the major currencies and the big banks in the US are writing off BILLIONS and this is only the tip of the iceberg. The worst in the US economy is yet to come. Everyone knows that the fundamentals of the US economy are in extremely bad shape.
So, what is happening?
Gold is up, the EURO is up. The CHF is up. The USD is down, down down....how far no one knows.
How does this affect this kind of hedging?
Well, as long as the hedge sticks we should fare the storm on lower margin settings. But, if you look at the EURCHF 4 hr chart you will see that it is tanking. That means it takes LESS Swiss Francs to buy a EURO. The CHF is getting stronger in other words. Why? Investors often flee to the Swissy in unstable times. And, boy, are these ever unstable times!
This does have an effect on our equity swings in this system. But, as long as it goes down gradually and is offset by interest and sell high earnings we should not see too much damage.
The system is designed for the long term and is not a daytrading system. As long as the interest and sell high profits accumulate it makes it easier to go up than down.
You can see that recent events have affected the equity fluctuation to the negative on the left.
It cannot always go up. Must take the good with the bad.
Equity will go up and it will go down all while we are getting daily interest and buying low and sell high.
I guess the markets will do what they do.
Let's see how the USD fares next week.
The USD has been seeing all time lows against all the major currencies and the big banks in the US are writing off BILLIONS and this is only the tip of the iceberg. The worst in the US economy is yet to come. Everyone knows that the fundamentals of the US economy are in extremely bad shape.
So, what is happening?
Gold is up, the EURO is up. The CHF is up. The USD is down, down down....how far no one knows.
How does this affect this kind of hedging?
Well, as long as the hedge sticks we should fare the storm on lower margin settings. But, if you look at the EURCHF 4 hr chart you will see that it is tanking. That means it takes LESS Swiss Francs to buy a EURO. The CHF is getting stronger in other words. Why? Investors often flee to the Swissy in unstable times. And, boy, are these ever unstable times!
This does have an effect on our equity swings in this system. But, as long as it goes down gradually and is offset by interest and sell high earnings we should not see too much damage.
The system is designed for the long term and is not a daytrading system. As long as the interest and sell high profits accumulate it makes it easier to go up than down.
You can see that recent events have affected the equity fluctuation to the negative on the left.
It cannot always go up. Must take the good with the bad.
Equity will go up and it will go down all while we are getting daily interest and buying low and sell high.
I guess the markets will do what they do.
Let's see how the USD fares next week.
Saturday, November 3, 2007
Navigating a Crashing Dollar
After being through 2 Shanghai Crashes and about 6 Sub-Prime crashes this past year I am still amazed at how the hedging of the FOREX market has held up in the chaos.
Some traders I know were in and out of the market due to overmargined accounts and trying to tweak a system that works. They lost money.
But, when you just set the hedge up with a conservative margin with the intent to stay in for the long term the results can be much better because you are moving forward without the losses due to jumping in and out of the market.
See the latest results of the live demo on the left.
My real money accounts are doing as well or better than this demo.
Every demo and every live account I or my trainees have done since early 2006 are either well in profit or breakeven at this writing.
Hedging is a beautiful thing. With good money management the sky is the limit using such a strategy.
Though the USD is steadily declining in value and buying power it is good to have something to partially compensate.
FOREX RISK DISCLOSURE: It should be understood that Currency trading involves high risk. There is always a relationship between high reward and high risk. Any type of trade speculation that can yield an unusually high return on investment is subject to unusually high risk. Only surplus funds should be placed at risk and anyone who does not have such funds should not participate in trading foreign currencies. Currency trading is not suitable for everyone. We assume no responsibility for errors, inaccuracies or omissions in any material provided. We do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. We shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses, lost revenues, or lost profits that may result from any material provided.
Some traders I know were in and out of the market due to overmargined accounts and trying to tweak a system that works. They lost money.
But, when you just set the hedge up with a conservative margin with the intent to stay in for the long term the results can be much better because you are moving forward without the losses due to jumping in and out of the market.
See the latest results of the live demo on the left.
My real money accounts are doing as well or better than this demo.
Every demo and every live account I or my trainees have done since early 2006 are either well in profit or breakeven at this writing.
Hedging is a beautiful thing. With good money management the sky is the limit using such a strategy.
Though the USD is steadily declining in value and buying power it is good to have something to partially compensate.
FOREX RISK DISCLOSURE: It should be understood that Currency trading involves high risk. There is always a relationship between high reward and high risk. Any type of trade speculation that can yield an unusually high return on investment is subject to unusually high risk. Only surplus funds should be placed at risk and anyone who does not have such funds should not participate in trading foreign currencies. Currency trading is not suitable for everyone. We assume no responsibility for errors, inaccuracies or omissions in any material provided. We do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. We shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation, losses, lost revenues, or lost profits that may result from any material provided.
Friday, September 28, 2007
Hedging the FOREX Market: Changing the Paradigm
It took me a while to get it too.
Hedging the FX market requires a completely different mindset.
I have seen no less than four experienced traders get hammered using the same system that I use because they simply get too involved and cannot shake the fear/greed mentality that comes with directional trading and is why most traders fail when trying to guess the market.
Traders often try to beat the market.
When you hedge using the system I use all you want to do is STAY in the market!
When a directional trader sees an equity drop of 2000 on a 10,000 account they are programmed to see this as a 'drawdown'.
But, a real drawdown in directional trading would leave you with only 8,000 to work with to build your equity back up.
But, with hedging as I do it, if your equity drops to even $5,000 you are still earning interest and buying low and selling high as if you were in the market at the $10,000 level because indeed you are. You still have roughly the same number of lots and are earning the same amount of interest daily.
What this does is make it easy to go up but hard to go down. It works kind of like a ratchet effect. You know, kind of like the price of gasoline. :)
It is like the wheels are greased for increase while resisting decrease. If the equity drops there is the mediating of daily interest and regular buy low sell high profits.
So, as long as you keep your margin low you have a very good chance of riding through times when the correlations are off.
In hedging the only thing we really want to see for long term success is a relatively high correlation or negative correlation between the pairs we trade. If the EURUSD goes up we want to see the USDCHF going down, and so on.
I was asked the other day what would happen if the USD tanks even further.
With the system I use it is not an issue as long as the correlations stick. If the USD tanks then the EURUSD should go up and the USDCHF should go down. We will buy low on the USDCHF and sell high on the EURUSD. All the while we will be earning substantial daily interest at 400:1 with triple interest on Wednesdays because of the weekend downtime in the market.
The key to this system is to keep the margin low and largely stay away from the USDJPY. The correlations are just not consistent enough and I would leave this for the traders who are intimate with the Yen.
Too often people are looking for a get rich solution to their financial problems and fail to have a plan that will really work in the long run. Most people are so occupied with just tried to keep up an unsustainable lifestyle and just ahead of the bills each month. In fact, the majority of households would be in financial crisis if there were two months, or even one month, without income. So, it is really had to get people to think ahead and see the big picture.
Using a good hedging system we can have very good years and not so good years. But, with the power of compounding and proper money management wonderful things are possible.
To learn more about compounding see the link on the left of this blog.
Anything is possible in terms of gains. Improper use of the system can also result in losses.
See disclaimer.
Hedging the FX market requires a completely different mindset.
I have seen no less than four experienced traders get hammered using the same system that I use because they simply get too involved and cannot shake the fear/greed mentality that comes with directional trading and is why most traders fail when trying to guess the market.
Traders often try to beat the market.
When you hedge using the system I use all you want to do is STAY in the market!
When a directional trader sees an equity drop of 2000 on a 10,000 account they are programmed to see this as a 'drawdown'.
But, a real drawdown in directional trading would leave you with only 8,000 to work with to build your equity back up.
But, with hedging as I do it, if your equity drops to even $5,000 you are still earning interest and buying low and selling high as if you were in the market at the $10,000 level because indeed you are. You still have roughly the same number of lots and are earning the same amount of interest daily.
What this does is make it easy to go up but hard to go down. It works kind of like a ratchet effect. You know, kind of like the price of gasoline. :)
It is like the wheels are greased for increase while resisting decrease. If the equity drops there is the mediating of daily interest and regular buy low sell high profits.
So, as long as you keep your margin low you have a very good chance of riding through times when the correlations are off.
In hedging the only thing we really want to see for long term success is a relatively high correlation or negative correlation between the pairs we trade. If the EURUSD goes up we want to see the USDCHF going down, and so on.
I was asked the other day what would happen if the USD tanks even further.
With the system I use it is not an issue as long as the correlations stick. If the USD tanks then the EURUSD should go up and the USDCHF should go down. We will buy low on the USDCHF and sell high on the EURUSD. All the while we will be earning substantial daily interest at 400:1 with triple interest on Wednesdays because of the weekend downtime in the market.
The key to this system is to keep the margin low and largely stay away from the USDJPY. The correlations are just not consistent enough and I would leave this for the traders who are intimate with the Yen.
Too often people are looking for a get rich solution to their financial problems and fail to have a plan that will really work in the long run. Most people are so occupied with just tried to keep up an unsustainable lifestyle and just ahead of the bills each month. In fact, the majority of households would be in financial crisis if there were two months, or even one month, without income. So, it is really had to get people to think ahead and see the big picture.
Using a good hedging system we can have very good years and not so good years. But, with the power of compounding and proper money management wonderful things are possible.
To learn more about compounding see the link on the left of this blog.
Anything is possible in terms of gains. Improper use of the system can also result in losses.
See disclaimer.
Tuesday, September 25, 2007
Global currency market balloons to $3.2-trillion a day
TONI VOROBYOVA
Reuters
September 25, 2007 at 11:31 AM EDT
LONDON — Trade on global currency markets has jumped a record 71 per cent over the past three years and is now worth more than $3.2-trillion (U.S.) a day — roughly equal to the entire annual economic output of the world's third largest economy, Germany.
Daily turnover has soared from $1.9-trillion in 2004, partly due to greater activity by hedge funds and “black box” computer trading, the Bank for International Settlements said on Tuesday in a benchmark survey which it conducts every three years.
Currency trading rose in Canada, but not nearly as much as elsewhere. Volumes rose 11 per cent to $59.8-billion a day -- the lowest growth rate since the survey began in 1983. Almost all Canadian transactions had the U.S. dollar on one side.
The survey underlined London's leadership in the world of currency trading, which is hard to measure as most business is conducted by telephone or on electronic systems rather than....
For the Full Story CLICK HERE
Reuters
September 25, 2007 at 11:31 AM EDT
LONDON — Trade on global currency markets has jumped a record 71 per cent over the past three years and is now worth more than $3.2-trillion (U.S.) a day — roughly equal to the entire annual economic output of the world's third largest economy, Germany.
Daily turnover has soared from $1.9-trillion in 2004, partly due to greater activity by hedge funds and “black box” computer trading, the Bank for International Settlements said on Tuesday in a benchmark survey which it conducts every three years.
Currency trading rose in Canada, but not nearly as much as elsewhere. Volumes rose 11 per cent to $59.8-billion a day -- the lowest growth rate since the survey began in 1983. Almost all Canadian transactions had the U.S. dollar on one side.
The survey underlined London's leadership in the world of currency trading, which is hard to measure as most business is conducted by telephone or on electronic systems rather than....
For the Full Story CLICK HERE
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