In this week’s “market thoughts” we will use the opportunity to expand on one of our newer trading systems, Currency Trader System. Some of our clients have asked us for a more in-depth explanation of the notion of using futures to trade in currencies, as opposed to buying ETFs on NYSE.

In our currency trading system our rules of engagement are only for long-term cycles because it eliminates short-term madness. If you want to speculate in short-term cycles then our trading signals are not for you. The game of trading the top currencies of the world is for a very select group of players and the banks. It is the largest market, open 24 hours via Globex, and only large banks as well as a handful of sophisticated traders and large multinationals who are hedging their productions, make money in the long run. The rest are the speculators and 99% of them lose their capital. However, small traders also create liquidity for big players in the futures market. Banks usually don’t get into futures because they trade their own position with other banks.

So now why does it make sense to do it in the long-term cycle? Because you avoid the daily drama, the emotional roller coaster of the futures market and you get a smoother run, be it a long or short position. Shorting currencies can yield big profits in the long-term, hedging against currency fluctuations if your base currency is not the U.S dollar.

Why do we prefer the futures market for currencies? Liquidity is far better in currency futures than the new ETFs in this market.

As for the equities, we expect markets to remain bullish this week as well. Our short-term and intermediate cycles continue in a bullish direction. The markets may challenge and possibly exceed their July highs. Make sure you keep updating your Stop prices everyday by going to the signal pages. It will significantly reduce the emotional roller coaster and let you ride the trade in peace, and it will lock in profit or have a cap on losses in the beginning of a trade.

Let us know via email if we can help you in any way.