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All over for the $A

I heard a snippet on the radio yesterday from some some economist who was supposedly an expert on the $A. This experts opinion was that it was all over for the $A and I wondered what that meant and I presumed he was referring to the fact that the $A is now apparently range trading in a block from about $US 0.99 to $US 1.01.

Far from this being a negative I would consider this be a positive – aside from the benefit of being able to buy stuff like books from overseas without having to worry about local retailers jamming it up your backside with their rip off pricing.

It is a positive for traders simply because it gives defined breakout ranges. If price moves above x go long if price moves below y go short. The process is not terribly complicated and whilst range trading may seem initially to be frustrating it is just the way the world works. Prices move from trending to not trending and you only need to worry about them when they are trending. Too often traders become concerned with what might happen to price when by any objective quantitative measure nothing is happening to price.

You only need to worry when something is actually happening.

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Comments

  1. So true Chris!

    I often hear people give their predictions on where the AUD is headed, and I think to myself “are these people actually backing their opinions with their own cash?”. More often than not, I would expect that the answer to this question is a resounding “no”.

    This is why I would rather trade based on what I see on the AUD price chart rather than having to form a fundamental view of what price the AUD “should” be, or where the AUD “should” be heading. I want to trade based on facts – that is, where price has traded as a result of real market participants who actually back their opinions with cash.

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