1. What are your recommendations on how to trade Forex this summer? What should be the trader's tasks in August? What should we prepare before leaving for holidays?
I am a big believer in creating investing plans in advance. For example, let's assume that although inflation is not an issue in the U.S. yet that it will be eventually. I can create a plan to profit from its appearance by looking at past periods, evaluating trading strategies and designing risk control that would benefit from these kinds of economic conditions in advance so that I am prepared for future market conditions and not having to create a plan on the "spur of the moment." If the market does slow this summer - I think it is the perfect time to start creating conditional plans not just for inflation but for a variety of potential market conditions that may emerge through the end of 2010 and 2011.2. What book do you recommend us to read this summer?
This is a tougher question for me to answer since there are so many good ones out right now. Taleb is always a good read but if you want to dig into something really fascinating and a little more vacation-friendly I thought the “Big Short” by Michael Lewis was excellent. Its not exactly a "traders tips" kind of book but it offers real insight into the mentality of the bankers that contributed to the crisis over the last few years. I think this kind of analysis can actually be beneficial to traders trying to look for the signs of the next bubble/crisis/opportunity.3. What should we do when returning to the markets in September and what is your forecast for the major currencies in Q4?
I think that most traders would agree there is a massive bubble in U.S. treasuries right now and that this seems to be the biggest potential disruptor lurking in the market. We have seen some weakness in the dollar over the last two months, which has been surprising considering the strength in the bond market. Because of that, I suspect that we may be on the edge of a break (even a small one) in the treasuries market and we could see a dollar near 2008 lows again. That could be a very interesting opportunity and it would represent a confirmation of the triple top that has been forming on the USDX over the last 18 months. This kind of disruption may be better leveraged with a long term option (to tolerate potential volatility) than an outright short.--
John Jagerson is Founder of LearningMarkets.com. Co-author of “Profiting with Forex”, John has worked in the capital markets and private equity for most of his career - including investing, writing and money management. [More about John Jagerson]
