Trade of a Decade?

S

SecretGeek

Hello everyone. I am new here.


I created a basic channel chart (see attached) of the Euro Dollar for its entire history of trading. I have attached this graphic for you to view. It the pattern continues, a top may occur in the latter portion of 2009 and a bottom around 2017 or so more years but the bottom is not important now as I am focusing on the top as it is within eyesite.

In my opinion, there is no reason to make a couple of thousand or two. It takes too much energy when our minds can be used for the big trades. I focus on the big trades. This is one of 'em.

I plan to ride $50K to see what happens but I need to to turn this into to $100K before it is time for the middle peak in late 2009. With forex the limit is 100:1 margin ratio. I intend to use 50:1 just to be cautious in a volitile market. In other words, I hope to not sell off some of my position when estimating the top when I short the top @ 50:1. I believe there will be one major top and a couple of mini-tops similar to the 1992 time frame. One mini-top is being made right now which is one the verge of being parabolic curve busted downward.

So, I take $100,000 cash with $5,000,000 buying power or 5 $100K lots. Hold on to the position for about 8 years from the top to the bottom of the channel. For each pip, the $5M would be $500. At each mini-peak on the way to the eight year bottom, I short more since the equity has fallen less than 50:1. At each min-bottom, I cover the secondary shorts but I save my orginal position. I figure there is 700 pips to be made with out the secondary trades. 700 pips * $500 per pip with -2 carryover is around $350K. $350K / 8 years ($43K) = a seven fold factor since I started with $50K.


OK. Let's hear the opinions now, good and bad.
 
Quote from SecretGeek:

Hello everyone. I am new here.


I created a basic channel chart (see attached) of the Euro Dollar for its entire history of trading. I have attached this graphic for you to view. It the pattern continues, a top may occur in the latter portion of 2009 and a bottom around 2017 or so more years but the bottom is not important now as I am focusing on the top as it is within eyesite.

In my opinion, there is no reason to make a couple of thousand or two. It takes too much energy when our minds can be used for the big trades. I focus on the big trades. This is one of 'em.

I plan to ride $50K to see what happens but I need to to turn this into to $100K before it is time for the middle peak in late 2009. With forex the limit is 100:1 margin ratio. I intend to use 50:1 just to be cautious in a volitile market. In other words, I hope to not sell off some of my position when estimating the top when I short the top @ 50:1. I believe there will be one major top and a couple of mini-tops similar to the 1992 time frame. One mini-top is being made right now which is one the verge of being parabolic curve busted downward.

So, I take $100,000 cash with $5,000,000 buying power or 5 $100K lots. Hold on to the position for about 8 years from the top to the bottom of the channel. For each pip, the $5M would be $500. At each mini-peak on the way to the eight year bottom, I short more since the equity has fallen less than 50:1. At each min-bottom, I cover the secondary shorts but I save my orginal position. I figure there is 700 pips to be made with out the secondary trades. 700 pips * $500 per pip with -2 carryover is around $350K. $350K / 8 years ($43K) = a seven fold factor since I started with $50K.


OK. Let's hear the opinions now, good and bad.
More...

"I believe there will be one major top and a couple of mini-tops similar to the 1992 time frame. "

The next Jesse Livermore... The market does not care what anyone believes. For every time someone has a clever idea, the market will make him a fool many times over. Will you be posting about why the wheels fell off your plan in a few months/years?
 
"I created a basic channel chart (see attached) of the Euro Dollar "

So how new are you to this? That chart you posted is not a "Eurodollar" chart.

But yeah, good luck anyway, you might want to know what it is you're actually trading, though...
 
2009? 2017?

Who are you, Nostradamus?

Trying to forecast so many years into the future by technical analysis?
Please don't be offended, but you don't have a clue.

Some top pros like Warren Buffett and George Soros have been able to forecast a couple years into the future, but by using fundamental, macroeconomic, perhaps even political analysis.

But using technical analysis?
My god!
 
The longer one's time frame, the less reliable technical analysis becomes.

TA works great in the short term because supply and demand--which is what technical analysis purports to meaure--is the most dominant force in establishing short-term trends.

Fundamental analysis is a more appropriate tool in (trying to) gauge long-term trends. But the markets (all markets) tend to be efficient over the long term, so even with fundamental analysis it is difficult to succeed.
 
Quote from smilingsynic:

The longer one's time frame, the less reliable technical analysis becomes.
More...
That's odd, I usually hear the opposite..



With regard to the OP's plan, all I'll say is buying that last trendline touch in August '07 at 1.3350 stands out as one of my best FX trades to date. Additionally, I've had a similar theory, that simply trading the multi-year trendline touches (in any instrument) offers the highest risk:reward scenarios of nearly all trades. The only downside is the frequency of trade signals, they usually only come up once every few years per instrument.

With regards to the euro itself, given the underlying upward trend, I don't think shorting the overheard channel line offers the same risk:reward as buying the lower channel support. Not only are you fighting the LT trend, but the interest rate differential is now against you as well (1% might not seem like much, but leverage that 50:1 over the course of months and it'll add up quickly). Also, where do you place your stop? If you use the channel line itself, you're constantly increasing your stop as it ascends.

All in all, this trade is not nearly as lucrative as buying the lower channel and having your stop rise with your trade direction, but that trade of the decade has already passed by...
 
Quote from Trader KGB:

That's odd, I usually hear the opposite..



With regard to the OP's plan, all I'll say is buying that last trendline touch in August '07 at 1.3350 stands out as one of my best FX trades to date. Additionally, I've had a similar theory, that simply trading the multi-year trendline touches (in any instrument) offers the highest risk:reward scenarios of nearly all trades. The only downside is the frequency of trade signals, they usually only come up once every few years per instrument.

With regards to the euro itself, given the underlying upward trend, I don't think shorting the overheard channel line offers the same risk:reward as buying the lower channel support. Not only are you fighting the LT trend, but the interest rate differential is now against you as well (1% might not seem like much, but leverage that 50:1 over the course of months and it'll add up quickly). Also, where do you place your stop? If you use the channel line itself, you're constantly increasing your stop as it ascends.

All in all, this trade is not nearly as lucrative as buying the lower channel and having your stop rise with your trade direction, but that trade of the decade has already passed by...
More...

Great reply.
 
The next Jesse Livermore... The market does not care what anyone believes. For every time someone has a clever idea, the market will make him a fool many times over. Will you be posting about why the wheels fell off your plan in a few months/years?



The market? Hmmmm. I am going to be nice.....I like reading Livemore's words. I don't recall ever being made a fool by the market so this is the first for me by someone that doesn't know me. It is not too often I make a losing trade. This specific trade will occur. WATCH! :)
 
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