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7 ways to monetise on the US bankruptcy

  #1 (permalink)

Melbourne
 
Trading Experience: Intermediate
Platform: NinjaTrader
Broker/Data: MB Trading, Kinetick
Favorite Futures: Forex, AUD/USD
 
Posts: 14 since Aug 2011
Thanks: 9 given, 6 received

7 ways to monetise on the US bankruptcy

Hi Everyone,

Sorry for the catchy title... couldn't help myself... 7ways are provided at the bottom.

Well, we basically know what's going to happen in the US and I was keen to see how you are planning to cash in on the current events.

I am watching solely the AUD/USD and my take is:
  • AUD has seen a lot of weakness from it's 1.08ish highs (interest rates coming down). Further downside to be expected.
  • The recent price hike back to .95s is imh not driven by AU at all but purely due to weakness of the USD.
Now of course you can argue it all 10 different ways, that's just my base assumption.

Now let's look into the future:
1.) The US will not be bankrupt forever so options are:
- they agree on more funding on time at some stage today/tomorrow.
- they agree in the very near future after that.
2.) Either way the USD is going to quickly re-gain most of the strength it had before.
3.) ...and as such we can expect the AUD to plummet a fair way very soon.

So far, so good.

Now here is the tricky bit - how do you cash in on this precious "knowledge"?
Ideally I'd want to build a nice size position to participate in that move.

Well here they are - 7 ways I see you could cash in:
1.) Plain short the AUD/USD with a small position and a wide stop in the realm of 2 ATR daily.
2.) Pick a likely time when the positive news will come out and wait until such time then enter with a larger position
3.) Simply spread your entries with Limit short orders over say 100 pips and let the market take you into an ok avg price.
4.) Wait for the news and then build a position with the new down move.
5.) Guesstimate a resistance level based on charts, volume etc. and just put a large limit order there.
6.) Combine some of the above.
7.) <Your idea goes here>

Keen to hear other thoughts on the matter!

Cheers,
Frank

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