The debris of the past will always carry seeds for future germination. History repeats itself and one needs pay attention to the cycles of time and the lessons to be drawn. One cannot help oneself from observing the past and comprehend the historical parallel that need's be drawn. In such manner of understanding, it is for no small reason that a tiny, disciplined force of men from the Tiber spread throughout Europe and Asia Minor in the 1st century BC to the 1st century AD. Rome as an institution was unparalleled to this point in the story of civilization. That Rome should march across unknown lands with courage and determination speaks volumes of the faith She had in Her organizational skills to confront any size of foe.
In AD 43, Roman Governor of Britain, Gaius Suetonius Paulinus fought the Iceni tribes of Boudica. At the famous Battle of Watling street, Paulinus mustered a mere two legions, Legio XIV Gemina and Legio XX Valeria Victrix, plus auxiliaries amounting to a force of a mere 10,000 men according to the Roman historian Tacitus. Boudicia's forces were described as 'so many thousands" by Tacitus and another Roman write Dido places the army of Boudica at a colossal 230,000 men and women! at the end of the day Tactitus fgoes on to describe a loss of 400 Roman infantry to 80,000 Iceni and the utter rout of the Iceni. Incredible as this seems, the organizational skill of the Roman force locking their shields into a wall plus the terrain shaping a pocket, could only lead to one outcome as the Iceni hurled themselves forwards in waves with little room for mobility.
There are two important lessons that I wish to discuss:
1. Terrain; where you decide to pitch your fight will largely determine whether you end up on the right side of history.
In the example of the EUR/ USD currency pair and last Friday large US NFP data release, should you have entered a short trade within the 1.08 area prior you stood to make over 140 pips as the momentum of the news release saw the currency pair crash to the low 1.07 area. conversely if you times your trade badly and entered near 1.0750 you could have suffered the chance of retracement and a pitched battle to get out of position if you chose the terrain of 1.07 to enter your short trade on the pair.
2. Your tools of trade; why two Roman legions withstood the brutal force of Iceni tribes was largely due to the weapons that they carried. In the one hand the Roman Legionnaire carried the short two sided sharp sword; the Gladius and in the other a bulk of a shield. It has been shown in archaeological discoveries that a mere 1 inch tip of the blade was ever used by the soldier. This was because the chief weapon the Roman infantryman used was the shield to smash the enemy in the face and then use his Gladius in a sharp and single upwards thrust to stab the enemy in the abdomen and chest with deadly effect. Barbarian heroes used to long sword fights were slain in seconds. In such manner the option position you take may become your Shield as your spot position in the currency becomes your Gladius for a sharp stabbing action.
I do not advocate trading currency naked with stop losses. It becomes easy for traders to cut their stop losses and let their losses compound. In such manner how often we hear of traders making 70-80% in 1-2 months and then going up like a super nova in the 3rd month.
You walk into a battle without a shield you will perish. Similarly, you trade Forex without options and sooner or later you will perish.
Futures options are expensive and not recommended unless you have a trading capital of over $200,000 to command. Shortly before the NFP data release the spot EUR/ USD was trading around 1.0830 and futures call options with December 15 strike at 1.10 were trading at approximately $9000 value. Therefore to take a short trade futures contract plus enter into a long call option may have cost the investor near $12,000 in total, and given that one should never take a position with over 10% allocation to total capital that would have been very expensive indeed.
Smaller traders are better suited learning to use Binary Options which are far more cheaper to hedge against the spot position. Please turn to wizeoption,com to learn about Binary Options for your portfolio hedge.
Thank you
Pieter Bergli - DeLoren Trust Holdings
A non-profit commitment to provide education on the properties of currency markets
Forex market commentaries and media reports for free
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
* European Union laws require European Union visitors to this blog to know that cookies are used by Blogger and Google, including use of Google Analytics and AdSense cookies and in reading material from this blog do consent to the use of such cookies
Pieter Bergli - DeLoren Trust Holdings
A non-profit commitment to provide education on the properties of currency markets
Forex market commentaries and media reports for free
Disclaimer - U.S. Government Required Disclaimer - Commodity Futures Trading Commission
Futures and Options trading involves risks of losses. No representation is being made that any reader and account will or is likely to achieve profits or losses similar to those that are being discussed on this blog http://forexeducationperspective.blogspot.com/. The past performance of any trading system or methodology discussed is not necessarily indicative of future results.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All trades, patterns, charts, systems, etc., discussed in this blog http://forexeducationperspective.blogspot.com/ are for educative and illustrative purposes only and not to be construed as specific advisory recommendations for actual trades. Disclaimer - http://forexeducationperspective.blogspot.com/ bears no responsibility for the trading actions of its readers.
* European Union laws require European Union visitors to this blog to know that cookies are used by Blogger and Google, including use of Google Analytics and AdSense cookies and in reading material from this blog do consent to the use of such cookies
