Saturday, March 1, 2008

Crushed By The AUD/JPY Rollover?

How did you do during the recent AUDJPY (AUD/USD to USD/JPY) freefall?

If you were paying attention you noticed the double top happen not too long ago -- the one I blogged about recently. That was your warning that the market was facing a potential reversal.

The market fell pretty fast. I hope you weren't sitting on any large unprotected positions.

While I don't have the patience to stay completely out of the market until large drops have happened, I can certainly add additional capital to my account to take advantage of the drop and treat it like the opportunity it is. However, I do have to wonder if this is going to end up being a retest of the DOW lows since the most recent bottom.

So, I now have three things to consider:
  1. Is the market going to recover quickly, such that I want to be in it?
  2. If I jump in the market now, is it going to sink and retest lows due to a DOW decline?
  3. If the market does continue to decline, will it do so over a long enough period for me to be ready to inject some more capital at that point too?
Honestly though, I'll probably just execute a plan the emulates dollar cost averaging and not worry about it. I really enjoy being involved in the market without having to seriously worry about it.

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