ForexSpirit

February was a pretty good month for the euro against the US dollar. The euro finally broke out of the 1.29-1.305 trading range and climbed back up to 1.3250 by the end of the month.

I rounded the month out with the closure of my long standing open trade from early January. After being opened at 1.3161 the trade was closed out at 1.3216 during Tuesday’s London session. Nothing substantial had changed my outlook that the euro is going to be the stronger of the two currencies for the foreseeable future, which is why I held the position open for so long.

In the end, it still ended up being a small losing trade, as the interest rate premiums I had to pay just edged out the profit I made from the actual price difference between my open and close rates.

During the NY session on Tuesday I entered a Q4 trade after the release of the very poor US Durable Goods number. The headline number came in at -7.8% versus the expected consensus number of -2.4%. The core number was just as bad, coming in at -3.1% against the expected -0.2%.

The US Consumer Confidence and Existing Home Sales numbers out shortly after the US Durable Goods failed to prevent a rise up to the 1.3250 level, whereupon my profit target for the Q4 trade was hit. I had gone for a clean 35 pips.

The Existing Home Sales numbers were interesting. While the headline number showed an increase in the number of home sales, the report also listed increased inventories, a longer average time to sell and lower sale prices. When this information is coupled with the largest drop in New Home Sales in 13 years, which was released on Wednesday, and the continuing problems experienced by sub-prime lenders the US housing market is still looking decidedly weak.

Throw in the jitters caused by Tuesday’s plunge in the DOW of 3.3% and things are certainly looking to be interesting this month.

Will the US economy enter a recession this year? Bernanke and Greenspan seem to be squaring off on opposing views. I found Greenspan’s comments made in Tokyo today to be slightly hilarious.

“By the end of the year, there is the possibility, but not the probability of the U.S. moving into recession,” Greenspan said, according to notes taken by Bernard Key, a former economics professor at Tama University in Tokyo, who attended the event.

Maybe this statement has been lost in translation, but as far as I’m aware possibility and probability mean pretty much the same thing. Instead of using the word probability I would expect to see the word certainty. Otherwise it just ends up being an hilarious statement that says pretty much nothing. On the other hand, Greenspan is infamous for his weirdly worded statements, so it might just be exactly what it seems.

Back to the review of February’s trading activity.

I had eight trades close out, leaving me all out of the market at this time. Seven trades were in the money, and I had one loser, which was described above.

The change to my account equity for the month was: +6.6%.

In trying to gauge how much equity growth I should be targetting each month I’m reminded of a statement I heard about how Quantum Fund, a hedge fund that was set up by George Soros and Jim Rogers, returned 4000% over a ten year period. If you break that number down what percentage return a month does that equate to?

The answer is around about 7.16% per month. If I can get a montly return of anything close to or above 7% then I now consider it a very good month.