How to Make Lots of Money Trading FX, or at least Fake It

Opening bell...Nikkei plunges over 5%, USDJPY threatens recent lows....BOJ to the rescue!

Japan's central bank injects a huge amount of liquidity into the market and shows it's commitment to prevent a market meltdown, while staff at the nuclear plant in Fukushima rush to head off a possible nuclear meltdown; wow, excitement all around, of the kind we could use less of, especially on a monday morning.

USDJPY briefly threatened to commence a major sell-off, but as of this writing, has managed to keep it's head above water (i'm sorry, but i have to emphasize - no puns intended - anywhere in this post).

USDJPY keeping afloat - just.

 

We'll have to see how this pair closes over the next few days, to determine whether it's still worth holding on to the remaining JPY longs. As for the determined JPY shorts out there (and there's a lot, i know), well, sometimes it's good to hang back and look at a long-term chart to get things into perspective:

Whoa Nelly! What a rally in USDJPY!

What the hell was that! Well, the Kobe earthquake back in '95 (amongst other things) triggered a major USDJPY bull market that lasted a couple of years or so. Is history going to repeat itself? We'll see. It's quite clear the levels we should note, so just react accordingly (yes yes, easier said than done but it's quite do-able i assure you).

And what about the EUR?

No, it's not the Eurovision song contest, just some finance ministers in yet another very important meeting discussing very important issues. How's it affecting the single currency? Who has got the traders' votes? What brilliant world-saving ideas have they come up with? So much excitement...

Well, EUR rallied in very early trade (while the genius here was still in deep slumber after much vodka-induced madness) but met the thugs, sorry, sellers waiting just below the psychologically mind-numbingly important but ultimately meaningless 1.4000 level. After that action has not been very interesting (until now at least), safe to note that traders seem to be watching another psychologically mind-numbingly important but ultimately meaningless level and taking that as support - 1.3900. Wow, why don't we just trade to 2 decimal places. Still long. Still waiting. I was sure Yoda was talking about me way back then when he said. "The boy has no patience."

As I'm writing this, the boys stateside have just put down their coffee and started work selling shares and such, but I'm in no mood to participate much. The news coming out of Japan has been depressing. But I take comfort in seeing their resilience; "bravery in the face of adversity" as they say. 

To all those affected by the disaster, and traders jumping into the fray, i say, "take care, and may the gods smile upon you".