Tuesday, February 10, 2009

Infrequent Nibbles

I'm getting into this small position size infrequent trading style.

For example, with a pittance of my capital at risk I am earning nearly a 5% annual return. What am I trading? I'm holding the ever popular AUDJPY carry trade pair of course.

Even with the recent wildfires in Australia I really don't see them falling off the map completely. Come on, realistically, how low can their dollar sink? Now that it is at these very low levels any given change in pips is magnified in terms of percentage moved. This gets amplified as the AUD falls relative to the JPY.

So, I have my average position displayed on my chart. When possible I'll try to snap up a small position when the price is relatively low. When it is relatively high I'll do the opposite. By this, I mean that I'll sell a position that was opened above the average price and take a profit.

At the same time, I'll pump a small amount of additional capital into the account on a monthly basis to ensure that I never have a significant total percentage of account value at risk. Given the economic mess that we are in I see this as a long term play measured in years.

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