FX Family Valueschanges according to my perception of the market such that I feel
like I should get out of the trade. Otherwise, sometimes I’ll be in a
position and I feel like I can get a better price for it so you know I’ll
get out but with intention of getting back in. Or there’s sometimes
when, let’s say, I’m losing in a position, but I’m still making money
on the interest rate, so I’ll get out.
Q: How do you determine very little risk?
A: Well, I really define it in terms of where the exchange rate has
been in the past. I look to buy cheap, like multiyear lows or sell
at multiyear highs. For instance, I will look at the U.S. dollar/yen
and if it’s currently trading at 110, I may look at historical data
and see that there is very little risk that it go to 100 by next year.
So I will set a band that I am willing to trade in—meaning that
I am only willing to add to my position, regardless of whether it
goes up or down within those bands. If it breaks those bands, I am
out of the trade. Also, interest is very important to me because I
am holding very long-term positions. If I am long the U.S. dollar/
Japanese yen at 110 and I earn interest on the position, the interest
income may eventually lower my entry price to 107 to 108, for
example. For my style of trading, I need to take active measures to
lower my entry price such that eventually I only need a very small
move to push me back into profits.
Q: Do you look at charts to figure out the zones?
A: Yes, while I’m studying price activity, I go back in the charts
about 25 years and I just keep on zooming in and zooming in to
see if there is any previous market activity that reflects the current
market activity—basically how the currency has behaved in the
past and how that relates to the future. It really helps a lot when I
take a look at the charts and zoom out to see the long-term trend,
go back in, zoom out, go back in, and after doing this I sit and think
about the price action.