Where it not for lousy trading charges tagged onto the minor currencies,  I prefer trading the exotic currencies. Singapore offers a strong currency that can be considered in many ways like buying Chinese Yuan.   Much more commonly traded though are the regulars – GBP, Swiss, Canadian, Yen, etc.

While the moves have been good in the majors, they are more challenging to predict because the manipulations from central banks come in huge waves. The minor currencies are less likely to experience such a coordinated attack and tend to prewarn much more.

The best trade against the USD though has been gold. We cannot get the leverage – that makes forex trading like cocaine addiction – when going into a gold/USD swap.  My early Forex trades employed 50:1 leverage.  Insanely stupid at the time -even while I did have some seriously profitable trades, I have dialed back to 10-20x leverage in my Forex trades and much prefer Options on ETF’s with only 2:1 margin. The trend is much more predictable while the time line of the trade is much longer, risks are reduced.

Right now I am setting up a few Forex trades. I went long Canadian and already banked good profits. Long Brazilian Real which does not follow the Yen line at all on moves against the dollar. The Real moves to it’s own tune, but the trend is probably to correct an over valued position then rocket higher shortly.  Lastly, the Aussie central bank is putting the interest rate screws to the system and leaving the Fed stuck in the starting block.

Borrow USD and buy almost anything else for an easy 3% guaranteed profit. Juice this with 20:1 leverage and the former Yen carry trade has been supplanted by three other letters: USD carry trade.

Viva la financial engineering!!