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Okay, but which is the winning position? Do you want you to be high man, or low man? I've heard people arguing both positions, and it just makes my head hurt. Or does it depend on the particular economic situation which position is preferred? Is there any possibility of explaining this in simple terms for those of us who are monetarily subliterate?

The winning position? No such thing, over all the time.

The winning TACTIC? Ah, that's easier.

I directly noted that strong currencies tend to persist in strength, and weak ones in weakness. Not joking around at all.

Just now, in concordance with this view, I'm long a good deal of EUR/USD (preferring the Sept CME/IMM futures to an interbank forex position), with a number of very short-dated (expiring June 6) out of the money call options written against the position.

Nothing's perfect, of course. However, if EUR does anything but crash, say 500 pips over the next 9 trading days, I will have made a tidy profit.

Attempting to predict intra-day and intra-week movement in currencies is enormously difficult, and I've no intention of trying. In any case, what information I have about sundry gov't policies regarding currencies is, by defintion, far inferior to the information other large mkt participants have. Why try to 'outsmart' them? What a mug's game that is.

Central tendency in the outright position, and time decay in the options position, are the two greatest allies that a currency trader can have, and can put regularly on HIS side in most trades.

If I had no position in Euro just now, I'd certainly write the ECM (June Euro) 115 or 114.50 put options, straight out, pocketing about 6% net on capital in the remaining 9 trading days.

Best wishes, FReegards, and Happy Memorial Day!

One other thing, mate.

In terms of trading, there IS NO MONEY, ANY MORE: CURRENCIES AREN'T MONEY, in the sense of the classical economic definition (medium of exchange, storehouse of value, unit of account). Currencies are these days exactly just like soybeans or copper or orange juice; they are commodities. That, and no more...and they should be traded accordingly.

Naturally enough, currencies aren't necessarily affected by the same factors as affect cocoa or wheat or silver, and a good thing, too. Weather (said he, naming only one factor) changes day-to-day and week-to-week; gov't policies and broad macroeconomic situations do not.

Not trying to be obscure here, at all -- just don't know what information might be most useful to you. (sorry!)