Safe havens currencies retain or increase in value during risk off environments, meaning when economic turbulence is upon us. Three major safe haven currencies are the U.S. dollar, the Japanese Yen and the Swiss Franc. In the past several months we have witnessed a divergence in the equity markets. While all major equity markets around the world are doing down, the US market is the only one holding on for dear life. So in a risk off environment commodity type currencies decline in price as a result.
On July 1st I when short two different Japanese forex pairs.
Monthly Chart (Curve Time Frame) – monthly supply is at 121.00 and monthly demand is at 97.000.
Daily Chart (Entry Time Frame) – the chart suggests to go short at the daily supply at 108.60.
NOW – Price stopped me out before pushing lower this past week.
Monthly Chart (Curve Time Frame) – monthly supply is at 0.05600 and monthly demand is at 0.04600.
Daily Chart (Entry Time Frame) – the chart suggests to short price at the daily supply at 78.000.
NOW – this trade is still in play at this time.
Both trade set-ups were a Reward to Risk of 5:1. So although I was stopped out on the USD/JPY, if the CAD/JPY ends up hitting my target, my account will go up 4%.
The game of trading is a probability game, which you most trades have less than a .500 batting avg (win/loss ratio). However, as long as your avg win is greater than your avg loss, your equity curve should be positive. Let me illustrate, if my avg. win is 3X my avg. loss, all I need is a minimum win % of 25% to be profitable. And if your avg. win was 20X your avg loss, you only have to be right 5% of the time. This is why I stopped sweating my losses years ago because my losses lead to my wins. Until next time.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.