A senior commented: "Who knows such an insane money making strategy? I have been trading FOREX for some time. I certainly never learned it."

The Hedge Funds attacking the RMB certainly know it. Hopefully, every FOREX trader will know it within weeks. They would flood the system with millions of orders betting the devaluation of RMB. The Central Bank of China would have no choice but to re-evaluate its strategy. Do it now before the Reserve have been drained!!!

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Lawrence,  I would consider that expecting the past six month trend to continue straight line projection to the following six months is naive and too simple minded.  Nothing on earth is so perfect and smooth.

TS
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We are not looking for perfection. We are talking about the strategic directions. The West devised such rules to attack any Nation without firing bullets. Should China stupidly play according to such rules?

The calculation is to show that any average person can be a part-time FOREX trader and make millions. (The Hedge Funds are already making billions.) China is stupidly draining its reserve to protect the Currency Exchange Rate. The rules set up by the West is so biased that China simply have no chance to win.

Go back to the rigid Foreign Exchange Control days and do NOT play the stupid game...

Introduce the New Competition - two camps competing to develop the poor Nations. Make others rich so that one can be rich and remain rich.

One comment: "Your calculation is theoretically correct. But in practice, no one does things to that extreme unless it is virtual money. Most people will take some money out early to enjoy. They will invest less aggressively to reduce the potential downside risks."

With 200K, the total protection is 2000PIPs theoretically. Using it to protect 1 unit of bet is definitely sufficient. But to use it to protect 32 bets towards the beginning of the sixth month, the protection will only be 62PIPs (2000/32).

Most people will be yelling with joy if they can double their money in six months.

Keep up with the theoretical calculations, they are good stimuli...

Question 1: If Central Bank of China or its agents do not participate in the FOREX Market any more, what is likely to be the outcome?
When there are sellers of RMB and no buyers, the RMB will devalue very quickly. Instead of a maximum depreciation of 2% a day, the depreciation can be many times that (Learn from USSR and the Asian Financial Crisis).

Question 2: Where do the FOREX Market Makers get their RMB to do the trading?
They do not need to own any RMB. The FOREX Market plays on derivatives – or numbers based on the trading. For example, I do not need to own any USD or RMB to buy or sell the USD/CNH pair. My account is in Hong Kong Dollars.

Question 3: What will happen to my Open Order (betting RMB to depreciate) when there are no buyers of RMB in the FOREX?
The USD/CNH rate will shoot up from the present 6.8 to well over 10. You may not be able to close the order to realize the profit. But on the books, you will show a very high unrealized gain. You may be able to use that unrealized gain to do other trading...

Question 4: Is it likely that the Central Bank of China to take the drastic action of not supporting the RMB in the FOREX market? It still has close to Three Trillion USD reserve.
Three Trillion in a daily 5 trillion market is not very much. The Hedge Funds and calculating Traders are draining that reserve slowly. They already succeeded in capturing 1 trillion. There are still close to 3 trillion for them to profit. China already fell into the trap of "letting the market determine the rate". The Market is actually the gang of crocodiles feasting on the unknowing. It will take many weeks or months for the Chinese Decision Makers to think through the problem and the solutions. My bet is that they will eventually quit the game – probably after losing another trillion.

Question 5: If I jump into the FOREX market and sell the USD/CNH pair now, am I likely to make some profit?
Yes. While the Central Bank of China is still in the "consideration mode", you are likely to make some money. Take profit while you can. If China really decides not to pay the FOREX game and go back to pegging to the USD rigidly, you may never realize your profit.

Question 6: Are you claiming that the five trillion USD FOREX trading is an Economic Weapon that can be used by USA to destroy any Nation?
USSR was destroyed. The Asian Miracle evaporated. China lost a quarter of its reserve. Instead of using the reserve to buy goods and services (or recruit and train talent), China handed the reserve to the crocodiles. When will China ever learn?

Went to the iFXexpo  in Hong Kong. Got much information.

The FOREX trading in China is not yet regulated. But the activity is rapidly increasing as Chinese Citizens have more spare cash.

I believe the best way is to channel that cash into Meaningful Economic Activities such as helping other Nations to become rich.