- Central view : Risk OFF = low risk/high reward now. Represented by basket of short AUD, EUR, Copper and Nikkei.
- Hedge : Risk ON = long CAD. Pick a range and trade around it.
- Trading strategy : Towards low 1.02s, go for jugular; lift hedge entirely and go fully Risk OFF. Towards 1.04, go fully naked Risk NEUTRAL. This has worked beautifully for 2 rounds already. Serious money involved here. (Meanwhile, don't forget USD/CAD is in a downtrend which is why it was chosen as the Risk On proxy).
- With USD/CAD now at 1.0325, am fully naked Risk OFF (covered short this afternoon again at 1.0230). Have re-established partial hedge again at 1.0340 in futures even though spot high tonight thus far is only 1.0337. Now at 1.0312.
- Right mental frame of mind of great import in trading. Choice to switch core = long CAD to Risk OFF was key.
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