FX Family Valueslooking for long euro/U.S. dollar positions. I am looking to short
the euro/U.S. dollar. I don’t enter into these trades to lose, I know
no one does. But for me, this is an investment and not speculation.
Therefore, it is important for me to find ways to optimize the
probability of this trade winning, and one of the ways is to follow
the interest. Following this strategy, I have had cumulative returns
of 80 percent across the past four years.
Q: When did you decide to trade like this, averaging up and
averaging down? Did someone teach you this?
A: Well, it was really at the point where I saw that when you’re
losing, especially when you’re losing on negative interest rate dif-
ferential position. The interest rate doesn’t help at all it actually
hurts you. So it’s at that point I realized that I only wanted to enter
positions that I received interest on. Not only that, I also don’t want
to enter positions into currency pairs that have very high volatility,
for instance, the British pound/Japanese yen. Even though it has
a very favorable interest rate differential, the trading range is so
high that the risk may be huge.
Q: Which currency pairs do you like to trade?
A: The U.S. dollar/Japanese yen all the way and, to a lesser
extent, the euro/U.S. dollar—but not as much the euro/U.S. dollar
in recent months because I feel the interest rate spread is going to
narrow. So presently, it’s definitely with the U.S. dollar/Japanese
yen.
Q:Whatdoyounottrade?
A: I’ll never trade something with an unfavorable interest rate
differential. I can’t keep track of all currency pairs so there are