Long EURUSD by shorting USDCHF

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#1 Thu, Jan 5, 2012 - 7:51pm
damijan
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Long EURUSD by shorting USDCHF

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Here is my idea. I am looking to go long EUR (waiting for 1.20-1.25 area). But with that trade there is a risk of eurozone SHTF. But, since CHF is pegged to EUR it is the the same if I go short USDCHF. I guess if the SHTF in eurozone CHF will de-peg (I expect CHF to de-peg in 2012 anyway).

What do you think?

Edited by: damijan on Nov 8, 2014 - 5:15am
Sat, Jan 7, 2012 - 6:05am
Red Pill
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I think that when the

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I think that when the SHTF the EURCHF peg will be thoroughly tested

I do think that as the value of the CHF is being artificially manipulated downwards now, a sudden violent correction *should* be in the upwards direction. 

BUT, there have been rumblings from the SNB about 1.20 not being low enough, and that 1.25 might be a better level, so being long expecting a move in one direction and another sudden CB intervention in the other direction wouldn't be much fun on leverage.

I am tempted to go and change a few thousand Euros into CHF and wait on a longer timeline for reality to reassert itself, but doing it on leverage via Forex, probably not so much.

so with regards to short USDCHF, long term I think you'll be right, but can you stay solvent in the meantime?

I can only show you the door.. Take the Red Pill #Occupy Money
Sun, Jan 8, 2012 - 6:56pm
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"January effect" on EUR/USD

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A nation that is afraid to let its people judge the truth and falsehood in an open market is a nation that is afraid of its people. John F. Kennedy
Mon, Jan 9, 2012 - 3:09pm
damijan
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Red Pill: staying solvent is

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Red Pill: staying solvent is not a problem. I don't use extreme leverage. Most of the time I simply buy (or sell) 1 year options and liquidate when the price is right. That way I don't have to worry about margin calls and stuff like that.

Mon, Jan 9, 2012 - 3:20pm (Reply to #3)
damijan
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I don't believe EURUSD will

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I don't believe EURUSD will go below 1.20 this year. USA will just print if it falls close to 1.20. I just read an article today, that exports here in Slovenia (we are just a German sattelite basically) and Germany have risen significantly. Low euro is already showing a positive effect on EU economy, so the opposite must be true in the US.

That is why I think US will not allow the dollar to rise so high.

But I could be wrong, that's why I like to use 1 year options. They give me enough time to be right eventually :).

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