I need to "trade out" of my long, USDJPY position

Yesterday I posted here how that early morning 300 point collapse in USDJPY was ridiculous.

It came about as a result of the BOJ standing pat on rates. "That's how people trade?" I asked.

Well apparently.

As if a greater degree of negative rates was somehow a "stimulus." The whole thing was absurdity to the extreme and completely out of paradigm with the current reality so what was I supposed to do? I simply HAD TO go long USDJPY and I did.

That trade was actually in the money for about 2-3 hours, but then it turned around and we're about 100 pips lower than where I bought in.

Then what did I do? Did I panic? Did I beat myself up? Did I frantically PAY the market to get out and take a loss?

No. That is not the proper mental game and not the proper strategy.

While I believe my reasoning for buying USDJPY was correct (although in the backdrop there is a serious, bearish dollar environment developing now), it is not working out.

What I teach in my Forex course is that we trade according to the principles of MMT. This trade was. (Japan enacting a nearly, $200 billion FISCAL stimulus for the economy and earthquake cleanup and reconstruction. That's bearish for the yen all things equal.)

However, when MMT trades do not work and we are caught with losses (it can happen because sentiment, too, drives markets and when clueless idiots believe something they can push the market like a stampeding herd) my course teaches you the SKILLS to trade out of what is not working.

The best offense is a good defense!

So, that's what I am about to do...trade out of this position that is not working. I am adding another unit of long, USDJPY at 106.89 to lower my average.

Stay tuned...

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The yen rally this morning is ridiculous

Huh???

As you know I have been bullish on the yen for a while and it has rallied for the past three months, but two weeks ago I said to sell it and we caught a nice, 400 pip profit going short.

This was all based on strategic, calm, trading and an MMT understanding of what was happening.

However, we just saw something earlier today that shows you why people lose money. The yen surged because the BOJ decided to keep monetary policy unchanged. So?

That unleashed a massive 300 point move down in USDJPY.

People trade like this?

Yup. And that's why you can make so much money, trading against emotional, clueless, fools.

The lack of action by the Bank of Japan does not change the fact that Japan is putting through a major fiscal stimulus. They "front loaded" all their public works' spending ot the first half of their 2016 fiscal year (Apr-Sep, basically). It's about a $110b equivalent of spending. And they are probably going to pass a supplemental budget to deal with the recent earthquake.

What does this mean? It probably means USDJPY goes back up again and the fools who sold this pair this morning, on nothing, will get their money taken from them. That's as it should be.

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This week's issue of MMT Trader is out. Hot off the "presses."

Last week subscribers made 400 pips profit in USDJPY.

They were ready for the stock market "stall."

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USDJPY flying now. I called it April 7 when Japan announced its fiscal stimulus.

In my MMT Trader report of April 7, I recommended going long USDJPY. That trade now has a 200 pip profit.

That week, Japanese Prime Minister, Shinzo Abe, announced that the government would "front load" the nation's public works' spending to the first half of FY 2016, which has just begun.

Fiscal stimulus. Bearish for yen.

The yen had a huge rally leading up to that announcement. It started around Jan 28 when the BOJ went, stupidly, to negative interest rates. That move was intended to push the yen down, but it did the opposite.

The yen's rally attracted a lot of speculative long positions in the futures market. Spec longs hit the highest level in four years. Clearly, the yen was due for a selloff and the fiscal stimulus was the signal I was looking for.

Last week Japan suffered another terrible earthquake and now there is discussion of a supplemental budget for cleanup and reconstruction. This was also covered in the MMT Trader report.

By the way, it also recommended buying Japanese indices or stocks--some ADR's traded on U.S. exchanges.

Get a 30-day free trial to the MMT Trader.

Gonna short USDJPY pretty soon

The dollar is experiencing a bounce along with stocks after getting crushed over the past week. I don't know about the euro, which may very well head lower as it's doing now, however, I think the dollar's break all the way down to 116 yen on Monday signals a change in trend.

I have been looking for the yen to rally based on a couple of factors, one being the steep drop in oil prices and the other, the fact that after four years Japan has begun restarting their nuclear reactors.

Right now I am looking for a level  to short USDJPY and I think I may enter this trade around 121.28 if we get up there.