In September we saw a sell signal in the dollar, as indicated on the chart. A gap down. Good practice, following the marked Basing Point would keep the trader short up to the present, in spite of the rally of early November.
This could have been done by short the UUP or by long the FXE:
These are trade entries to trend trades. Is that a tongue twister? Too true, ’tis.
We wouldn’t be adding on at this point — unless extremely aggressive and a clear signal occurred.
We say these trades are no-brainers. Well, no brainers, some cojones, maybe. But if you’re involved in an issue and you see signals like this you have to jump.
One of the major methodological problems professional managers have is they don’t know how to buy or sell on signals, so they buy because the public likes purple widgets or earnings have increased for five years — yada yada. Wasn’t that why they bought Enron?