Chapter 9

Strategies for Position Traders

First published: 02 January 2012

Summary

This chapter explores three strategies with time frames of either the daily or weekly charts. The two aspects of position trading—swap and commodity correlation—are also explored to allow position traders to achieve maximum gains across several asset classes. The first strategy, swap and fly, takes advantage of the interestrate differentials between the currencies and aims to earn maximum returns by holding on to positions for an extended period of time. The next two strategies—commodities correlation and Siamese twins—are used specifically for the two most popular commodities in the world: oil and gold. Part of the commodity correlation strategy seeks to take advantage of the positive correlation between oil prices and the CAD/JPY currency pair. The second part of the commodity correlation strategy seeks to take advantage of the negative correlation between the Dollar Index and gold prices. This strategy is ideal for gold traders all around the world because it provides an objective way to take an entry for gold, using the Dollar Index as an important reference. The Siamese twins strategy is perfect for position traders because of the long time frame employed.

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