In the markets, the AUD / USD down, S & P / ASX 200 up to RBA interest rate cut bets is actually the so-called divergence bets in the world of forex trading. Why is it that the AUD / USD, S&P / ASX 200 down to RBA interest rate cut bets worked so well for its maker, Paul Schönfeld? The answer is simple; it was all just a setup.
That’s all that was: an advantage of a poor stock tip? I think that’s exactly what happened and I hope it goes away as soon as it started.
The truth is that Paul Schönfeld, the person behind the bets, must have known that fire is likely to play if volatility increases as the RBA rate cut rises. This is because the chances of some currency plummeting against the US dollar is high, so the situation can easily turn into one of political unrest.
The truth is that many countries and companies have already taken advantage of the credit crunch and have started taking their money out of the country. The truth is that they never get paid back like this and also go to zero in the long run.
This will lead to further losses and, of course, supplier industries will slow down in the coming months and years. Not a good thing for any market unless the underlying confidence level continues to hurt.
Thus, the opposite end of the equation becomes the primary problem for such an edge. The part that people go when they go for bets like this is the RBA Rate Cut.
That is the advantage for them. The part that the source of divergence betting is certainly good about the situation of the financial crisis and therefore could be the testing of the waters.
If he can pull from a breakout in the resistance value, then he has a good chance of making some profits. This is really what happens with the AUD / USD down, S & P / ASX 200 except for RBA interest rate cut bets.
But in the end it was actually the dubious traders who did pull away from an outbreak. This is what is happening in the world of forex trading.
How much profit the dealer made is not really relevant. What is important is that the leverage has been established and that its position is on firm ground. Of course, this is not possible if the bets never work.
A good indicator should not be used to have leverage. There is only one tool to use as well.