I Am Short AUD – No Matter What

It’s simple.

I’m short the Australian Dollar as a simple “fundamental play” on the looming troubles ahead ( not just for China but…) for global growth in general.

China slow down = Australian blues. This trade has no holes in it…..there is no “what if you’re wrong Kong”. It’s not a hunch. It’s a trade based in a simple and solid understanding of how “one” currency is likely to perform in the face of its largest trade partner slowing down, and buying less stuff.

Consider losing one of your biggest clients, or perhaps that regular customer at your burger joint has now turned vegetarian. Buying less stuff means your business will suffer.

I “could” get into all the small details, charts and graphs, facts and figures, dollars and cents, etc.. but you know me better than that. That stuff is “flat-out boring” and frankly…of no real consequence here.

I don’t need to be an economist ( god help me ) to understand how this sets up. No….I only need to manage my money correctly and let this do exactly what “I know” it’s going to do.

The trade will pay out well – I can assure you of that.

When? I don’t care.

I’ve been building a considerable position short AUD over the past month, and have continued to add at every instance the currency shows strength. These longer term trade ideas take time, patience, conviction as well solid money management as….I will continue to add “no matter what” as the trade continues forward with the ultimate “payout” likely being more than worth the effort.

If markets are just sitting still and grinding you in the short term….see what you can do about formulating some “medium/longer term plans”. Putting these in motion “today” makes for great returns down the road.

 

11 Responses

  1. @frenchdna March 5, 2014 / 3:37 am

    This post certainly echoes our little back-and-forth on $FB and answers my question.

    Thanks for the clarification.

  2. Careydina March 5, 2014 / 7:25 am

    Bad data of ADP non-farm employment from the US. There is rare good data from US recently. Lol… all pairs are doing well vs jpy/usd.

    • Forex Kong March 5, 2014 / 7:30 am

      Once again…..bad data….in fact the Macro data out of the U.S is as bad ( and actually I believe “worse” ) as data right around the pre crash 2008 period.

      So it goes to show just how desparate / much effort is needed to continue propping this thing up.

      It would be fantastic if we had a market that “did” trade on onthe fundamentals but unfortunately….that’s not the day and age we live in now.

      It’s a Central Banks world, the data means very little until “they say it does”.

    • Forex Kong March 5, 2014 / 7:35 am

      Or perhaps “today is the day”.

      Oil looks to be rolling over, the US Dollar strength “might” be for real here as well so……

      Everything I track “appears” to be reacting to the data as “it should” as EUR heads lower, as well the commod spike evaporated…

      USD/CHF still pushing as well……

      For a minute here it looks like things “make sense”. How long it lasts? These days…..not long.

      • Careydina March 5, 2014 / 8:10 am

        Ya has been waiting USD get strengthen (hope so), looking pounds fall soon but still in that range- GU has been very [email protected]#k up lately…

        Aud strengthen quite a bit today. Short aud/jpy again hehe…

  3. Rob March 5, 2014 / 11:21 am

    When you say you are building a position…curious as to what is the most equity you place on a trade once fully loaded? I’ve read different beliefs on the subject, just curious what your take on the subject is. Thanks, and also thanks for your input on the fundamental question yesterday.

    Take care

    • Forex Kong March 5, 2014 / 12:10 pm

      Not sure if my fundamental “answer” really helped much Rob…

      For some real “meat and potatoes” type fundamental learning maybe start by learning which currencies serve as “safe havens” and those that are considered “risk related” to start. As well have a look at how interest rates affect currency value, and try to get a handle on the current environment with respect to “where rates are likely headed” moving forward.

      Printing money as a concept generally lends to a “weaker currency” while “tightening / rising rates” generally push currencies higher.

      These are some basic principals but again we are talking about “fundamentals” so…no better place to start that at the very beginning.

      • Rob March 5, 2014 / 12:37 pm

        Right, that’s what I try and do. I use Forex Factory for news articles but was wondering where you prefer to get your articles from? I noticed yesterday you posted an article from Yahoo finance, so I’ll start checking there as well as Google Finance.

        Is the how much equity on “loaded” position too personal? If so sorry and thanks for your input again with the Fundamentals.

        • Forex Kong March 5, 2014 / 12:43 pm

          Actually I don’t read Yahoo Finance at all but did stumble upon the article…as it was “general” and pretty easy to read.

          No not to personal Rob…just that it takes a little longer / more time to explain that right here at the moment.

          In general I don’t usually even expose a 1/3 of total capital, but these longer term ideas / concepts could just as well be in a separate account as….I approach it a little different.

          Let me get back to you and likely just put a post together on it in general.

  4. schmederling March 5, 2014 / 8:24 pm

    Hey Dr.Kong….. all makes sense….. something is a foot for sure….. I have a positive fire in the 4hr TF with the 8hr & Daily currently running set-ups here…. with the daily on day 4 currently… we will see how these set-ups fire off providing direction….

    With the 4hr being positive current direction is up as we know….. the 8hr & daily will provide the breath of the move…… I’ll be monitoring these to see how this current POP continues to play out……

    Digger’s & metals also have several set-ups running – looking for direction to come tomorrow & into Friday with the jobs report….. should be below estimates as the trend continues ( cold weather LOL )

    Still tracking USD/JPY here on a daily set-up which for the time being as turned against me slightly….. we will see how that one plays out……. USD/CAD daily has fire Neg here so may finally get my out of this poorly placed trade….. live & learn…. might get lucky here….

    I don’t think Putin is done making his moves here just yet….. he continues to play chess while the US plays we checkers…. LOL love that one…..

    Cheers Schmed,

  5. schmederling March 6, 2014 / 7:11 am

    8hr fire positive here…. Aud/usd….. gonna play a little….. even for a little fun…

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