Monday, October 6, 2008

Europe Gets Crushed

Well, it's been an interesting 24 hours on the Forex markets.

I'd like to say I was on top of everything and made a boatload, but instead I have to admit this has been a lesson style experience. My stops were hammered mercilessly and then the markets dumped me unceremoniously on the pavement. So to speak.

I guess the theme of the day is weakness in Europe. Another theme might be strength in Japan though I think their claim to fame is merely stability by avoidance of stupidity. Think back a few months, when the Euro was hitting new highs daily, and the US was in the doldrums.

So, the big question of the day is really whether or not you expect the Euro to continue tanking in the short term. On the other side, you have to wonder when people will slowly unclench their butt-cheeks and allow themselves to convert their Yen into other assets. Obviously, everybody has been burned, so we can expect caution, volatility, profit-taking and anything else that can make the markets hard to fathom.

Just ask yourself, what's he worst that could happen? No, no, I'm not talking about supreme disaster, but with respect to whatever trade you might be interested in speculating on. Will the Yen rise, drop, go sideways? Will the carry trades buck like a bronco while Europe does a head fake, with intervention promised but not delivered?

I don't really know what to suggest. Wear your seatbelt? Okay, in English, take smaller trades and be sure to use protection, er, stops.

On the flip side, when it's over, you can easily be left on the sidelines. I mean, the world got it's panic on, is there much left? If you've already liquidated your kitchen sink, there really isn't much else to do during the next wave, is there?

Good luck out there!

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