How low the U.S. dollar? Part II

by | Feb 16, 2004 | Archives

Friday’s message looked at why I am not investing more in the falling greenback. I have 30% of my portfolio devoted in Euro and related currencies. This to me is enough. There are always some risks in forex trading and currency speculation but some extra risks you should be aware of are out there right now.

Fundamentals may suggest that the dollar could fall further, but technical measures may suggest otherwise. A good friend who trades regularly just wrote this:

“Gary, My currency trading program has changed along with my entire view & method of trading … & probably not a trade too soon. EVERY market I see is … well, witless (except maybe for some of the currencies). One thing seems increasingly clear: the easy money's already been made shorting the dollar.

“My trading method has now become completely technically-driven — relative strength & momentum ONLY … with clear stops on both sides of the trade for currencies & 10% stop-loss orders always in place for all others.

“No personal opinion of mine is involved (except if I want to trade in that market or not), & no decisions based on future-looking trading ‘advisers.’

“I'll happily listen to their opinions, of course but if the technicals don't work, even the most promising trades get put on the back-burner.

“Frankly, if these advisers aren't as confused as I am about this country's financial future, I wouldn't trust them, anyway.”

I have to agree with my friend that the dollar’s fall is beginning to take on bubble proportions and the greatest percentage of profits without risk may have been made. Another technical expert agrees as you will see in tomorrow’s message. Until then, good investing.