Fixed Odds Trading Strategy

I had an email from a member asking about long or short trades.

Here is the question:

Re the trade on Market forex £$ 32 day period. I would assume that you are fairly confident about this trade given the time period of 32 days. I was just wondering if it would be a good idea if I were to make more trades over a shorter time span within the 32 day period provided I could get the trades on at the same levels ie, low 1210 high 1405. What do you think?

And -my answer

What you are suggesting will not work with BOM. You can prove it to yourself by putting in a 7 day barrier trade at the maximum range that BOM will allow. You will find that not only is the spread much less than the 32 day trade but the offered return will be about 6%.

So to me that is a more risky trade for a much lower return.

The reason we get such good returns on the longer trades is because neither I nor BOM can predict what will happen in the markets. All we have to go on is the past market movements plus (in my case) the reading of the current state in the world markets.

For this trade you will find that changing the low level will do very little to the odds. It is the high level that will make the difference.

The credit crunch on both sides of the Atlantic plus the possible instability of some financial institutions has traders worried. The low value of the US$ is having a knock on effect on the world markets and I don’t see any significant support in the $ for now.

If the $ continues to decline then there is the possibility that the G7 nations will step in with support. The last time this happened was when the Euro needed support soon after it was launched.

So for me, these 30 day trades are set and forget. They will not be a large part of the trading strategy, maybe once a month depending on the market conditions.

If you are uncomfortable trading at those odds then just stick with the weekly trades that you will be getting.

Graham

Profit Vortex