Jul, 17, 2006 By Vikram Murarka 0 comments

Here is another trading story, again with Dollar-Yen as the background. Many Traders, especially in the early years, do not realize that there are two kinds of market - a sideways ranging market and a trending market. And unfortunately, there are often two kinds of Traders - range traders and trend traders.
This story unfolds in the first half of 1999. The Dollar-Yen market had stabilized after the fall of 1998. It had been trading sideways in a 7-big figure range between 117-124 from Feb-99.
Range Traders were busy making money hand over fist, buying low and selling high. The secret of their success was that few worked with Stops, because Stops have a habit of getting triggered in a ranging market.
But then, the unexpected (though inevitable) happened. Dollar-Yen crashed in July-99 to hit 115. A lot of the Range Traders were caught Long and wrong. Moreover, they did not have Stops in place. Worse, the market paused a bit after hitting 115. Many Traders thought the market was going to rebound and doubled/ tripled their Long positions, again without Stops.
Oh misery! The market resumed its fall, refusing to stop till it hit 105. It was later heard that one particular trader, who had been the toast of the market when it had been trading between 117-124, had been eased out his job and had quietly left the country.
Moral of the Story:
Work with Stops, always. Your stops may be wide; they may even sometimes be mental. But, be disciplined and implement your Stops when the Stop Loss levels are triggered. Otherwise you are committing trading hara-kiri.
In our last report (03-Sep-25, UST10Yr 4.22%) we expected the FED cut rates by 50bp in the rest of 2025 and the shortend of the Curve to move down with the US2Yr falling towards …. Read More
The WTI Net Long/short position has remained below 2 for about 2-months now, the longest time since 2006. The market sentiment continues to be bearish on crude prices for the near term. … Read More
In our September 2025 outlook (15-Sep-25, EURUSD 1.1725), we expected Euro strength to be limited to 1.19/20, to be followed by a decline to 1.12 by Mar-26 and 1.0875 by Jun-26. We had expected a rise in the Euro after an expected …. Read More
In our 10-Sep-25 report (10Yr GOI 6.48%) we expected the RBI to be on pause in its next MPC meeting on 01-Oct. This is to be seen tomorrow. We had also said there was room for the FOMC to cut rates by 25-50bp, and accordingly they … Read More
In our 12-Sep-25 report (USDJPY 147.96), we expected the USDJPY to limit the downside to 144 and ascend towards 155-158 in the coming months. In line with our view, USDJPY limited the downside to … Read More
Our October ’25 Dollar Rupee Quarterly Forecast is now available. To order a PAID copy, please click here and take a trial of our service.
