In order to put yourself in a position to profit from large trends, I believe you have to have a wild imagination.
Often the major market themes and trends of today have not happened before. In 2000, you cannot look back and find an example of another dot-com bubble and bust — it never happened before. The same goes for central banking stimulus of the past eight years. If you’re a fundamental trader, you cannot back test your analysis to predict how you’ll perform in the future.
On the other hand, if you simply follow the price trends, you can find many examples of booms, busts and consolidations. When you follow the trends, you don’t need to have all of the fundamental information to make decisions.
Every situation is essentially brand new. Having the open mindedness to execute your strategy in the midst of market turmoil and major moves that you cannot fully explain in the now takes a lot of guts and discipline.
The U.S. Dollar
You may believe that U.S. Dollar prices are destined to go down for a number of reasons — the Fed has printed trillions of new dollars, interest rates remain near zero, national debt and government spending continue to increase.
A convincing and logical case I must say, but prices are holding strong close to recent highs. What gives? I have no idea. Explaining market dynamics doesn’t make you money. Riding the trends does.
I challenge you to put your pride aside and find comfort in accepting that your fundamental opinion means nothing. You could be wrong and that’s OK. Also, despite your bearish opinion, you have to be willing to imagine the Dollar actually going up; breaking through to new highs and appreciating another 20–30%.
Crazy? That’ll never happen? I wonder if you imagined Oil falling 70% in last 18 months or European government bonds with negative yields. In this game, anything can happen.
The Dollar may not rally, but you have to imagine that to be a possibility. You won’t be able to buy the breakout if you cannot imagine it first.
Currently, the Dollar sits in a year-long consolidation between 100 and 93. My firm holds a small long position. If prices break above overhead resistance (green line), we’ll buy more. If they break below support (red line), we’ll cut our long position and go short. But we sit tight for now.
Past Performance is Not Necessarily Indicative of Future Results
There is always a risk of loss in futures trading.
This communication is for information purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product, an official confirmation of any transaction, or as an official statement of Melissinos Trading LLC. All information is subject to change without notice.