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USD Surge, Conservative Profit Targets Brings New Leader On Board

Monday’s contestant number 1 – whose portfolios held all three of the top spots – remained high on the leaderboard on Tuesday, as he closed the day with a currency portfolio balance of $190,476.91, gaining almost $10,000 in a single day. As we mentioned yesterday, contestant number 1 has taken a liking to the very volatile GBP/JPY and has frequently traded the pair on a short-term basis, flipping between long and short positions on an intraday and daily basis. His most recent effort to buy GBP/JPY on Monday near 205 worked out in his favor, as the pair rocketed higher during Tuesday’s trading session. While contestant number 1 has since exited this position with a profit, he sold GBP/JPY a good distance lower than Tuesday’s highs near 207. As a result, this leader’s days as a frontrunner may be numbered, especially since the runner-up is playing a completely different strategy.

Indeed, the same person is holding two of the top portfolios, as the second largest portfolio balance on Tuesday amounts to $183,721.40 while the third largest balance adds up to $173,714.80. How has he made his profits? This contestant, like the majority of participants in the currency trading portion of the contest, clearly prefers EUR/USD. This isn’t entirely surprising, as it is one of the most frequently discussed pairs in the media when referencing US dollar price action, tends to move in line with fundamental news, and also trades well within technical support/resistance levels (rather than blowing right through them like the Japanese yen crosses).

More specifically, since the beginning of the currency trading portion of the contest, this leader has alternated between rather large long and short EUR/USD positions. Furthermore, this contestant as not held a single position for more than 24 hours, nor has he taken profit on a position worth more than 100 pips. However, there was one exception: this contestant made over 150 pips – translating into over $23,000 – on the EUR/USD plunge on Tuesday. He sold the pair at the start of the US trading session after EUR/USD failed to break above 1.56, and he did it just in time. Within 30 minutes, the pair started to react to Federal Reserve Chairman Ben Bernanke’s speech at the International Monetary Conference in Barcelona (see the Currencies Update from June 3 for more on this). Content with his gains, this trader closed out his position as EUR/USD stabilized between 1.5425 – 1.5450.

Contestant number 1 and contestant number 2/3 have shown that money can be made by trading currencies on a short-term basis. Where these traders differ, however, is that our second/third place contestant has shown that a slow and steady approach that works with more conservative profit targets can be just as profitable.

Congratulations to our top traders and good luck!

Terri Belkas, Currency Analyst for DailyFX.com