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Wednesday, December 10, 2008

The Greatest Currency Trades Ever Made / 综合指数 2008年 12月 09日 / Composite Index 09/12/2008

The Greatest Currency Trade Ever Made By Zhuge Liang

George Soros Vs. The British Pound

The British pound shadowed the German mark leading up to the 1990s even though the two countries were very different economically. Germany was the stronger country despite lingering difficulties from reunification, but Britain wanted to keep the value of the pound above 2.7 marks. Attempts to keep to this standard left Britain with high interest rates and equally high inflation but it demanded a fixed rate of 2.7 marks to a pound as a condition of entering the European Exchange Rate Mechanism (ERM).

Many speculators, George Soros chief among them, wondered how long fixed exchange rates could fight market forces, and they began to take up short positions against the pound. Soros borrowed heavily to bet more on a drop in the pound. Britain raised its interest rates to double digits to try to attract investors. The government was hoping to alleviate the selling pressure by creating more buying pressure.

Paying out interest costs money, however, and the British government realized that it would lose billions trying to artificially prop up the pound. It withdrew from the ERM and the value of the pound plummeted against the mark. Soros made at least $1 billion off this one trade. For the British government's part, the devaluation of the pound actually helped, as it forced the excess interest and inflation out of the economy, making it an ideal environment for businesses.


A Thankless Job
A country can benefit from a weak currency as much as from a strong one. With a weak currency, the domestic products and assets become cheaper to international buyers and exports increase. In the same way, domestic sales increase as foreign products go up in price due to the higher cost of importing. There were very likely many people in Britain and New Zealand who were pleased when speculators brought down the overvalued currencies. Of course, there were also importers and others who were understandably upset. A currency speculator makes money by forcing a country to face realities it would rather not face. Although it's a dirty job, someone has to do it.

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综合指数 2008年 12月 09日


如图中箭头A所示,综合指数一度上探布林中频带(Bollinger Middle Band),惟综指再度精确的在此动态阻力线遇到阻力,这显示综指仍然未能摆脱弱势而转强。综指当前的支持水平依然是800点的胜图自动费氏线,阻力水平则继续的处于887点的胜图自动费氏线。

如图所示,布林频带(Bollinger Band)稍微打开6%,而综指始终还是处于布林中频带以下,所以综指有转弱的迹象。无论如何,由于布林频带只是稍微打开,所以综指还是不算是确认出现的下跌讯号,不过若布林频带接下来继续的打开,那综指将有进一步下跌的风险。

如图中箭头B所示,由于综指一度上探布林中频带的阻力水平,投资者在看好下进场,使到成交量暴涨了66.9%,惟综指的午盘在套利活动下回吐,成交量也未能成功的达到40天成交量移动平均线(VMA)的水平。

如图中C圈所示,随机指标(Stochastic)上周五已经接近零的水平,所以综指早盘一度出现技术反弹的现象。不过综指在收市挂全日下跌3.11点使到随机指标再度处于零的水平,这是综指继续出现短期超卖的讯号。

无论如何,由于随机指标始终是处于30%以下,这表示虽然综指有出现短期超卖的讯号,不过这暂时只能算是纯技术反弹的讯号,还未算是综指出现短期上扬的讯号,除非随机指标接下来能上扬突破30%。


Composite Index Daily Technical Analysis 09/12/2008

As indicated by A, the KLCI tested the Bollinger Middle Band dynamic resistance again, and precisely resisted by the Bollinger Middle Band. Therefore, the Bollinger Middle Band is still the dynamic resistance for the KLCI, while the support is still at 800 points and the other resistance is at 877 Fibonacci Retracement.

As shown on the chart, the Bollinger Bands Width expanded 6%, with the KLCI remained below the Bollinger Middle Band. Therefore, the immediate outlook for the KLCI is still bearish biased. If the Bollinger Bands Width should continue to expand with the KLCI below the Bollinger Middle Band, the would be more downside room for the KLCI.

As indicated by B, total market volume increased 66.9%, but still below the 40-day VMA level. This shows that the overall market participation has improved slightly, but still relatively insufficient.

As circled at C, the Stochastic had a rebound in the early trading on Tuesday, but as the KLCI started to decline in the afternoon session, the Stochastic returned to the 0% level, while still showing a short term bearish biased signal. Meanwhile, as the Stochastic is still touching 0% level, the over-sold signal remains intact, and therefore, some form of technical rebound is still expected in the near future. Nevertheless, despite a chance of a technical rebound, the Stochastic is still staying in its bearish region, unless the Stochastic could break above 30% level.

HAPPY INVESTING


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