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THE US dollar

Discussion in 'General Forex Talk' started by clem699, Jun 11, 2010.

  1. clem699

    clem699 Sergeant

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    The US dollar is such a strong currency amongst its pairs.Despite the terrible global economic woes,the dollar has continued to enjoy confidence/sentiment among traders as against the euro,chf,pound etc.Head or tail,the dollar remains a safe haven for traders.A typical example is the RETAIL SALES released earlier in the day,within 30mins into the release,the dollar had gained almost 100pips against the pound,that only left me wondering the risk news traders take since they take action immediately.

    Today,i raked in 150pips each in my 3 accounts on the GBP/USD pair in a sell position entered yesterday.Frankly,i have consistently continue to buy the dollar since Feb,2010 even when my system gives a sell signal,rather i will stay aside.

    What is the force behind the dollar strength,is it the continued claim that the US is gradually coming out of recession,after all,that is still a speculation as there are key areas of America's economy that are yet to get back to normal,i wish i have a concrete reason for the trust in the dollar?
     
  2. RahmanSL

    RahmanSL Major

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    Since market price for WTI Oil is based in USD, the price of WT Oil is my reliable indicator of the strength & weakness of the USD.
    WTI Oil and Gold, with USD, are all correlated.

    Am I correct?
     
  3. Pharaoh

    Pharaoh Colonel

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    Within reason, yes, but it's not a perfect correlation. A sudden, large move on oil or gold can outrace any correlated shift in dollar value, or may even go in the opposite direction. Plot it out on longer term charts to reduce the "static" and the correlation gets stronger.
     
  4. clem699

    clem699 Sergeant

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    I agree with you Pharaoh,their are instances when gold moves in a particular direction while the dollar is expected to go opposite but you discover that the dollar relatively remains stable for that period.

    I think one of the reasons while the dollar is the bride of all is,perhaps,because it is a major medium of exchange internationally and subsequent US governments have jealously guarded the dollar and was ready to crush any country that threatens the hegemony of the US.I think the dollar is strong not because of gold or oil,like what Rahman said,i agree that correlation do occur but those are just reactions to economic activities which are normal.I think that the dollar is strong because people all over the world believe in the currency and ironically have assisted in making it stay at the level it is.The dollar is strong and will remain a risk haven because we all respect the currency.
     
  5. RahmanSL

    RahmanSL Major

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    Thanks Pharaoh & clem699 for the above explanations, and yes, I did a “little” plotting and what you guys said are quite correct.

    So I will have to be careful in not “automatically” linking the 3 together when one of them suddenly moves in a certain direction.

    One more thing!
    With quite a number of countries facing some form of economic uncertainties (including the USA), how come the price of Gold has not gone up significantly as some “experts” have been forecasting?? I tend to agree with these “experts” as Gold has always been a safe haven in times of economic uncertainties. Or has Gold just simply been too over-priced by speculators in recent times?
     
  6. clem699

    clem699 Sergeant

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    Well,the so called experts are actually analysts and like you said,they only forecast.The literary meaning of forecast is to predict what you think will happen based on whatever strategy you rely on.I have come to agree that markets movement is majorly the perception of the actors(traders.)Hence,forecast will likely come true if it is generally perceived in that direction.

    Like i said earlier,currencies including commodities;gold are interchangeably traded and the level of volatility they enjoy depends on the confidence of the traders.For instance,if you are trading gold for the US dollar,these two are safe haven for investments and traders will rely on economic events to know which one to buy or sell.For me yes,gold may be over-valued but at some point,either technical or fundamental,gold will surely drop.
     
    #6 clem699, Jun 15, 2010
    Last edited: Jun 17, 2010
  7. clem699

    clem699 Sergeant

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    One of my greatest problems is my conservative attitude to issues,unfortunately it has had a lot of impact on my trades since January.My resolve not to sell the dollar even if my system tells me to do so made me to stay away from over 200pips i would have made today on GBP/USD.My strategy is to buy the pair if 1.4830-1.4850 is reached.I should have bought at 1.4700 and then added dips at 1.4660-1.4650 testing 1.5000 at first before 1.5150 monthly resistence zone because of today's support level of 1.4665 area which definitely is false breakout as the main support already holds at 1.4700-1.4690,monthly pivot pa moving up targeting 1. 4850 at second instance,if it breaks which is very likely,next would be 1.5000 tp and then,1.5150 on the long term which is monthly resistance zone.Unfortunately,due to my respect for the dollar i stayed away which i would not have done if the signal had gone the other way round,sell Eur.

    All the same,i made all the pips on my demo accounts.This is really a big lesson for me.Maybe i should give regards to the pound as well and only look down on the Euro.
     
    #7 clem699, Jun 17, 2010
    Last edited: Jun 17, 2010
  8. RahmanSL

    RahmanSL Major

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    For the past few weeks, I have been listening to, and following, experts saying "Sell" this or "Buy" that, especially on the GBP/USD and EUR/USD pairs.

    I think I will just listen to what "stoney' said: "Just trade what you see on the screen".

    I did that and had some great trades with little or no losses.

    The problem is that too many experts are reading more than what is really there, and than they come back the following day and say, "Oh yah, my indicator was off a bit in the forecast" or something similar to that.

    So, I think I will simple trade what the screen tells me is the market movement, but, of course, keeping a sharp look out for any news breaking events.

    All the best!
     
  9. clem699

    clem699 Sergeant

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    It took me two years before i could develop an effective trading style/strategy.Even now,i am still developing confidence which,for me,is the most difficult phase in trading.A typical example is this particular scenario which i talked about in this thread using the same strategy with 150 pips maximum risk this month: Demo accounts:700-720pips each compared to Real accounts:200-205pips only.

    Nobody tells me the direction of the market,i read what others feel or say about market movement but honestly,i trade what i feel and see.Funny enough i do not use any scientific or sophisticated indicator,the only indicator i use is monthly/weekly pivot points and only use daily pivot point to know the level of possible false breakout that could occur.Of course,news releases play slight role in my entry level,whether to enter or wait for the noise it would have generated to subside that is if the release comes at a period when i have a good entry signal and especially,if the so called news release is against my direction.That is the only role news play in my trading but the general economic situation of the countries play bigger role.For instance,i will always be happy when i get a sell order on Eur/USd because of the problems of many euro countries while i would likely stay aside for a buy Eur/USd signal.

    Rahman,we all are only trading what we feel hence,no retail trader is an expert,please stop using that word.Prepare well and be ready to take responsibility when you win and accept your losses.In as much as those who collect money from people for signals also have wild losses,then no expert anywhere only experienced traders which you,yourself can achieve.Having said all these,i agree that you should trade what you see and not what any-body tells you or sell to you because learning to be independent will benefit you in the long wrong.Yes,it is good to belong to forums but it should only be for general discussion and also to share experiences just like this particular thread,its essence is for you to learn from my error and not for you to think of copying my style because their is a SECRET to that formula which makes my application of the pivot points unique.

    Stony is absolutely right,it is always good to be independent but it comes with hard work.
     
    #9 clem699, Jun 17, 2010
    Last edited: Jun 17, 2010
  10. clem699

    clem699 Sergeant

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    The euro seems to be proving my emotions wrong.I think i should just follow my system which i set aside when a buy signal on the euro emerges just has i have it now.I have consistently saw profitable pips go away just because i have refused to buy the euro.It seems that euro zone crises is no longer of interest to traders.To be honest,i belong to does who thinks that the euro would collapse in the near future but i am confused now.Could it be that the market is in bullish consolidation and getting ready for a major downward move?
     

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