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  #1  
Old 10-30-2005, 04:20 AM
TStoneMBD TStoneMBD is offline
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Default Shorting the US dollar

All this talk about the dollar falling I'm starting to believe it. I hear that Buffet and Gates are shorting the dollar so why shouldn't I? From my understanding, any dollar you invest in the forex market allows you to control $100 worth of currency. Wouldn't it be a sound investment to short the US dollar with 100x leverage? If i diversify in foreign exchanges the only fear I have to worry about it is if the dollar somehow rises. Of course if it does I risk getting wiped clean. If it maintains its position for a long time I lose nothing, but if it collapses I would make a fortune once I buy back into the economy.

I'm a novice with these things so please fill me in on anything I am missing. It appears to me that the upside of shorting the US dollar is so great while the downside is so minimal. Because of this, I'm skeptical on its potential.

On another note, is there a way for me to setup my neteller account directly to the forex market so that I can enter and exit easily? Do I need to withdraw everything to my bank account and eft it into Forex?

What software would you recommend I use to short the Forex market and how could I get setup easily with minimal costs. I understand that 4xmadeeasy is a good program but I also understand that it costs far more than I'm willing to invest.
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  #2  
Old 10-30-2005, 09:31 AM
MMMMMM MMMMMM is offline
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Default Re: Shorting the US dollar

You do realize that if you work with 100x leverage, a 1% move against you will wipe out your entire margin thus closing out your position at a loss, right?

You should take a look at some past charts of the dollar's movement--hour charts, day charts, monthly charts, and yearly charts--just to see what kind of fluctuations are involved.

It is not that hard to call the direction right overall, yet still have your position wiped out in the shorter term if you are highly leveraged.
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  #3  
Old 10-30-2005, 03:25 PM
TStoneMBD TStoneMBD is offline
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Default Re: Shorting the US dollar

yah i entirely understand that, which is why i wouldnt invest everything with 100x leverage. also, 4xmadeeasy apparently has a stop/loss feature where you can tell the software once you lose x amount of money it immediately sells your position so you only lose that amount. you can still leverage 100x but you can at least keep half your roll if the us dollar rises. clearly though its not uncommon for a .5% influx on the dollar so leveraging in this sense is highly volatile. despite risk, it seems the ROI of this investment would on average be gigantic. do you not agree?
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  #4  
Old 10-30-2005, 06:11 PM
Sniper Sniper is offline
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Default Re: Shorting the US dollar

Trading in the forex market is a high risk venture, especially for a newbie... make sure you read up on position sizing and risk management before stepping up to the plate!

Some brokers that will allow you to setup (usually 30 day) demo accounts, where you can actually trade play $...

Capital Market Services - http://www.cms-forex.com/
Forex Capital Markets - http://www.fxcm.com/
Advanced Currency Markets - http://www.ac-markets.com/
Gain Capital - http://www.gaincapital.com/

The software and services are slightly different for each, so I would recommend you do some testing of each platform and see which YOU find the most comfortable.

Also, remember that currencies basically trade around the clock [img]/images/graemlins/wink.gif[/img]
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  #5  
Old 10-30-2005, 07:56 PM
Dan Mezick Dan Mezick is offline
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Default Re: Shorting the US dollar

TStone,

I see this post and I see your other post over there, on real estate.

You sense more inflation coming-- HERE, now-- and dont want your wealth's purchasing power to disappear. You seem to sense an opportunity in all this danger and are looking for specific action steps.

All you have to do is remember the lessons of 76-81 to do well in an big-inflation scenario. Study that period to be OK in your decisions regarding positioning.

The main thing to do is borrow cheap today-dollars at low FIXED rates, and make sure your cash (existing savings and debt) are positioned to benefit from monetary inflation. (An increase in the total dollars in circulation.)

This usually means real stuff: real estate, gold, gold stocks etc.

Lots of people will put homes on the market in the spring because of the expected real estate crisis and current attractive selling prices.

For example in my own home town this time last year there were 75 homes on the market; right now there are 175 homes available. Spring will bring even more supply; price must drop as a result to compensate. That may be an opportunity.

If you are so inclined consider buying gold (see symbol GLD).

The Fed says they are fighting inflation and that is PR and total BS. The reality is inflation is running away and these rate increases dont even come close to what is needed to stop it. They know exactly what they are doing. The cost of stopping the acceleration of the inflation trend with rate increases is huge: recession, a huge impact on balance of trade, etc. Just look at 1980-81 for an idea of how fun this will be.

At current real rates of interest (cost of money, minus inflation rate) they are literally paying you to borrow todays dollars and pay them off in inflated cheap future dollars later. Governments will always print more money to get out of a crisis. War is inflationary. Perpetual war means (likely) perpetual inflation.

It is unlikely China's cheap imports will continue to provide sufficient deflationary pressure to counter what has already started in terms of monetary inflation in the USA.

Add to this the statements from new-Fed-Chair Bernanke about "inflation targeting", "printing presses", and "dropping dollars out of helicopters" and you have the ingredients of a once-in-a-generation, perfect (inflationary) storm.

Inflation is a legal form of robbery. Anyone with savings in an account is being literally robbed blind by the inflators. The victims typically have no idea.

Ben Bernanke Background and Links

Lessons from 1976-1981

Investing in an Inflationary Scenario

Largest Producer Price Index Increase in 31 Years (since 1974)

Good source of info on current USA inflation situation.
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  #6  
Old 10-30-2005, 08:53 PM
mcb mcb is offline
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Default Re: Shorting the US dollar

the dollar has been on a rampage in recent months. buffet has been getting crushed on his short position, though he likes to buy and hold. the 100:1 leverage sounds large but you need to remember that in forex you are dealing in pips. reduce the lot size and each pip can be brought to $1.

the dollar is likely to increase in the coming months as it has in the past few months. bernanke, once in charge, could cause it to fall depending on what he decides to do regarding inflation.

the upside to shorting the dollar is that when if finally comes down you will make money. it would be best to wait for the initial decline and then hop on the train, this way you wont get stopped out when your margin runs out.

if you are new to trading currencies use something simple like forex.com. the spreads on the majors are at most 5 pips (i think, i dont use this company).
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  #7  
Old 10-30-2005, 10:43 PM
TStoneMBD TStoneMBD is offline
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Location: Rome, NY
Posts: 268
Default Re: Shorting the US dollar

when deflation occurs, how will this affect leasing rates and property prices? Inflation naturally raises prices but say the USD gets drops by 25%, would that mean that housing prices and rental rates are going to raise 25% to match the rate of inflation? i understand the theory that if i borrow money now and pay it back later i am paying it back with weaker dollars, but if borrowing now doesnt make me money through the process of inflation then what good is that?

if a deflation occurs, i have been told that the economy would collapse and real estate prices would drop. that makes sense to me but with deflation shouldnt the price of property stablilize to meet the rate of the us dollar? as a result, would real estate would initially plummet but rebound shortly after to make a gigantic profit for those who enter the market when it first crashes?
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  #8  
Old 10-30-2005, 10:45 PM
TStoneMBD TStoneMBD is offline
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Join Date: Jul 2004
Location: Rome, NY
Posts: 268
Default Re: Shorting the US dollar

how is the initial decline likely to happen? will deflation immediately occur in 1 quick motion before im able to buy in or will it occur in a trend like pattern where i can buy in as soon as i see it start to drop?
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  #9  
Old 10-31-2005, 11:44 AM
KaneKungFu123 KaneKungFu123 is offline
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Join Date: Feb 2005
Posts: 1,026
Default Re: Shorting the US dollar

[ QUOTE ]
TStone,

I see this post and I see your other post over there, on real estate.

You sense more inflation coming-- HERE, now-- and dont want your wealth's purchasing power to disappear. You seem to sense an opportunity in all this danger and are looking for specific action steps.

All you have to do is remember the lessons of 76-81 to do well in an big-inflation scenario. Study that period to be OK in your decisions regarding positioning.

The main thing to do is borrow cheap today-dollars at low FIXED rates, and make sure your cash (existing savings and debt) are positioned to benefit from monetary inflation. (An increase in the total dollars in circulation.)

This usually means real stuff: real estate, gold, gold stocks etc.

Lots of people will put homes on the market in the spring because of the expected real estate crisis and current attractive selling prices.

For example in my own home town this time last year there were 75 homes on the market; right now there are 175 homes available. Spring will bring even more supply; price must drop as a result to compensate. That may be an opportunity.

If you are so inclined consider buying gold (see symbol GLD).

The Fed says they are fighting inflation and that is PR and total BS. The reality is inflation is running away and these rate increases dont even come close to what is needed to stop it. They know exactly what they are doing. The cost of stopping the acceleration of the inflation trend with rate increases is huge: recession, a huge impact on balance of trade, etc. Just look at 1980-81 for an idea of how fun this will be.

At current real rates of interest (cost of money, minus inflation rate) they are literally paying you to borrow todays dollars and pay them off in inflated cheap future dollars later. Governments will always print more money to get out of a crisis. War is inflationary. Perpetual war means (likely) perpetual inflation.

It is unlikely China's cheap imports will continue to provide sufficient deflationary pressure to counter what has already started in terms of monetary inflation in the USA.

Add to this the statements from new-Fed-Chair Bernanke about "inflation targeting", "printing presses", and "dropping dollars out of helicopters" and you have the ingredients of a once-in-a-generation, perfect (inflationary) storm.

Inflation is a legal form of robbery. Anyone with savings in an account is being literally robbed blind by the inflators. The victims typically have no idea.

Ben Bernanke Background and Links

Lessons from 1976-1981

Investing in an Inflationary Scenario

Largest Producer Price Index Increase in 31 Years (since 1974)

Good source of info on current USA inflation situation.

[/ QUOTE ]

im not in a position to borrow money.

whats the best way to protect my money?

how can i buy Euro's? is this what forex is for? what EFT's I can buy to offset inflation?
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  #10  
Old 10-31-2005, 01:05 PM
Ed Miller Ed Miller is offline
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Join Date: Sep 2002
Location: Writing \"Small Stakes Hold \'Em\"
Posts: 4,548
Default Re: Shorting the US dollar

[ QUOTE ]
im not in a position to borrow money.

whats the best way to protect my money?

how can i buy Euro's? is this what forex is for? what EFT's I can buy to offset inflation?

[/ QUOTE ]

http://www.publicdebt.treas.gov/sec/seciis.htm

While this isn't a perfect option, it's an easy way to protect yourself somewhat from inflation.
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