Ufo propu engine, closed loop

[ltseung888]

The fourth Forex Transaction is interesting. It is still open.

When the Market is against you, what should you do?

(1) Suppose you sold RMB at 6.8500. You did not put in any limits as you were free and watched the market movements.
(2) The Market moved against you. It dropped to 6.8400. That represented a loss of 100PIP.
(3) You believe that the lowest value would be 6.8200. There is no way that the RMB will appreciate so much. You believe that the Hedge Funds will drive RMB to 7.0000 or more.
(4) The exchange rate continued to drop to 6.8300. The News was that the US stock and currency were falling because the Trump Executive Order against Muslims was facing opposition. The potential loss amounted to more than HKD18,000.
(5) There are a few options after guessing wrong.
(5a) Close the position and take a HKD18,000 loss.
(5b) Buy more RMB at the lower value, say 6.8250. The margin requirement is increased. But you have effectively reduced the break even point to (6.8250+6.8500)/2 or 6.8375.
- If the exchange rate moves up in your favor, you have two trades working for you.
- If the exchange rate moves down, you lose more. But that means RMB will appreciate significantly - the Hedge Funds do not like it. China also does not like it!
(6) When you have sufficient margin, you can keep both orders open and wait for the tide to turn in your favor.

Let us see what we can learn in this transaction.  It is not closed yet.


*** With the trade volume, 1 PIP represents approximately HKD85. Each open and close transaction involves 19 PIP or 1,615HKD. Frequent trading means giving a higher percentage to the Forex exchange.

[ltseung888]

The fourth Forex Transaction is interesting. It is still open.

When the Market is against you, what should you do?

(1) Suppose you sold RMB at 6.8500. You did not put in any limits as you were free and watched the market movements.
(2) The Market moved against you. It dropped to 6.8400. That represented a loss of 100PIP.
(3) You believe that the lowest value would be 6.8200. There is no way that the RMB will appreciate so much. You believe that the Hedge Funds will drive RMB to 7.0000 or more.
(4) The exchange rate continued to drop to 6.8300. The News was that the US stock and currency were falling because the Trump Executive Order against Muslims was facing opposition. The potential loss amounted to more than HKD18,000.
(5) There are a few options after guessing wrong.
(5a) Close the position and take a HKD18,000 loss.
(5b) Buy more RMB at the lower value, say 6.8250. The margin requirement is increased. But you have effectively reduced the break even point to (6.8250+6.8500)/2 or 6.8375.
- If the exchange rate moves up in your favor, you have two trades working for you.
- If the exchange rate moves down, you lose more. But that means RMB will appreciate significantly - the Hedge Funds do not like it. China also does not like it!
(6) When you have sufficient margin, you can keep both orders open and wait for the tide to turn in your favor.

Let us see what we can learn in this transaction.  It is not closed yet.


*** With the trade volume, 1 PIP represents approximately HKD85. Each open and close transaction involves 19 PIP or 1,615HKD. Frequent trading means giving a higher percentage to the Forex exchange.

The position is half closed with realized profit of HK$9,544.79.
Open 6.8245  Closed 6.8364 Gain of 119PIPs.

The profit side was closed first when the net gain was slightly positive.
(1) One technique is to close both legs simultaneously, realizing no gain or loss.
(2) Since it was so much fun, I decided to let the losing leg open. If the exchange rate goes down, I repeat the exercise. If the exchange rate goes up, I start to get more profit.


The quoted USD/CNY rate was 6.8310. CNY is traded in China. CNH is traded in offshore centers such as Hong Kong. The rates can be different somewhat. CNY rate is quoted by Bank of China. CNH rate is purely market driven.

[ltseung888]

The position is half closed with realized profit of HK$9,544.79.
Open 6.8245  Closed 6.8364 Gain of 119PIPs.

The profit side was closed first when the net gain was slightly positive.
(1) One technique is to close both legs simultaneously, realizing no gain or loss.
(2) Since it was so much fun, I decided to let the losing leg open. If the exchange rate goes down, I repeat the exercise. If the exchange rate goes up, I start to get more profit.

The quoted USD/CNY rate was 6.8310. CNY is traded in China. CNH is traded in offshore centers such as Hong Kong. The rates can be different somewhat. CNY rate is quoted by Bank of China. CNH rate is purely market driven.

As of Feb 1, USD/CNY closed at 6.87907. low 6.87738 high 6.88218

USD/CNH should be following with similar rate. The latest USD/CNH = 6.8364.  Thus it has room to increase. (RMB depreciates).

The bet is on a rate increase. Thus open another position at 6.8345.
The two legs are:
Open at 6.8458 profit limit 6.8503
Open at 6.8345 profit limit 6.8508

No stop loss. Can wait a few days. If successful, the profit from both legs should exceed HK$20,000.

This Forex trading is extremely addictive even with virtual money. No wonder the daily transaction volume exceeds 5 trillion and increasing. If China catches on, exceeding 10 trillion is possible.

[ltseung888]

As of Feb 1, USD/CNY closed at 6.87907. low 6.87738 high 6.88218

USD/CNH should be following with similar rate. The latest USD/CNH = 6.8364.  Thus it has room to increase. (RMB depreciates).

The bet is on a rate increase. Thus open another position at 6.8345.
The two legs are:
Open at 6.8458 profit limit 6.8503
Open at 6.8345 profit limit 6.8508

No stop loss. Can wait a few days. If successful, the profit from both legs should exceed HK$20,000.

This Forex trading is extremely addictive even with virtual money. No wonder the daily transaction volume exceeds 5 trillion and increasing. If China catches on, exceeding 10 trillion is possible.

@Tseung
If you are a successful Forex Trader, you will be logged out. It is like the gambling industries banning card counters. The Forex Industry is largely unregulated. If you were logged out and lost your earnings, (they will return your capital), there is no place to sue.

[ltseung888]

@Tseung
If you are a successful Forex Trader, you will be logged out. It is like the gambling industries banning card counters. The Forex Industry is largely unregulated. If you were logged out and lost your earnings, (they will return your capital), there is no place to sue.

China is looking for vehicles for its citizens to invest their hard earned money. If too much is invested in real estate, the real estate prices will shoot up like Hong Kong. The average income earners may no longer .to buy their own home. If the investing is in real assets such as gold, oil, factories, the prices will shoot up. The only way in the long run is let citizens invest in virtual assets such as derivatives.

I was against derivatives at one time. At that time, one can get a reasonable interest from deposits in the Bank. Now there is too much thin-air money. USA let Banks and other Financial Institutions to issue bonds with other bonds as "guaranteed assets" (or packaged the "mortgages" as underlying assets). That created the 2008 financial crisis when overdone. USA government had to print more thin-air money to support such thin-air bonds to prevent a total loss of confidence in the financial market.

If Forex trading were made legal and regulated in China, what will happen? If some of the spread money were automatically taken as "trading taxes", the Forex Brokers would be regulated and the investors/traders interests protected. The investors/traders may have to deposit a certain sum to the Government to safeguard them from total financial bankruptcy. The earnings would no longer be taxed again. The losses would not be reimbursed. (The person may have to fall back to survive on the deposited sum and/or fall to the social safety net).


Forex trading would reach many times the present daily 5 trillion USD level. Similar vehicles could be dreamt up. Is it a meaningful economic activity?