I have a diffferent trading style from most people on this list, and it has worked very well for me. (a) I hold the leverage down to 10:1 max, so I can ride out moves of up to 800 pips against me. (b) I don't use stops, although I will liquidate a position at a loss to free up capital for a better-looking opportunity. (c) I hold positions for anywhere up to 2-3 months. (d) I am a fundamental trader and I have no interest in doing voodoo with charts. The extent of my chart trading is that when currencies trend, they observably do it in channels, and I will set my entry near the bottom (or top) of the current channel and my target near the top (or bottom). For risk management, I use the limited leverage and I hedge. At the moment I am long the USD against CAD but short against EUR, GBP, JPY, AUD and CHF, with approximately the same amount of money on both sides of USD. At the present price levels, I start hitting the bumpers if USDCAD drops to 1.0200, without being offset by gains in my other positions. Which I think is somewhere in the same range of likelihood as flying pigs. The rise of the loonie is a bubble, which like all bubbles will eventually burst.
As to those of you who place faith in charts, I invite you to look back a couple of months and read all those postings that talked about support at 1.1650 and resistance in the 1700s.
Bank of Canada president Dodge has said the loonie is unjustifiably high. I agree with him.
As to oil, the OK refinery fire creates a bottleneck: downstream, a gasoline shortage and high prices at the pump (meaning inflationary pressure and less chance of a rate cut); upstream, a glut of crude and falling crude prices. Oil has also been a bubble: at a realistic rate of price increases since 2000, it should be trading at around $30-$35 today. It was pushed up to nearly $80 by Katrina, Iraq, speculation and the falling USD. Katrina and Iraq are old news, much of the speculation has unwound, and the USD will rise again. Of course the idiot in Iran keeps doing things that get oil bulls excited, like provoking wars between those two oil-producing superpowers, Israel and Lebanon. I think he does it to jack up oil prices and laughs all the way to the bank. Even so, he only got it up to $66, not $78 like last year, and it's now back to $61. I'm predicting $40 oil sometime this year. And the loonie can drop as fast as it went up.
As to our respective tax rates: do you realize that Americans pay more in federal taxes to support the public part of their health care system (Medicare, Medicaid, VA, tax breaks and subsidies) than Canadians do for their entire health care system, public plus private? And then Americans have to buy private health insurance on top of it. Work out the effects of all that, and there's practically no difference between us in real tax rates. The American system is way the most expensive in the world because it's fragmented and inefficient, and because in countries where health care is "free" people don't hit doctors with huge malpractice suits. And if you say "waiting lists", I will say "the uninsured".
