Inverted Currency Contracts...

[Matt Bowen]

Not sure if you guys have been paying attention to the inversion on the prices (front month to back months) on the US DOLLAR, BRITISH POUND and AUSTRALIAN DOLLAR... Don't roll your eyes on these things :rolleyes: seriously, this is a heads up... this kind of information is key to understanding the fundamentals of supply and demand and what drives prices.

Bottom line... look before you leap!

[Biggo]

Not sure if you guys have been paying attention to the inversion on the prices (front month to back months) on the US DOLLAR, BRITISH POUND and AUSTRALIAN DOLLAR... Don't roll your eyes on these things :rolleyes:


And the answer is ??? :confused:

[Matt Bowen]

I'm giving you the hints... I'm not spoon feeding anybody here becuse it only creates more work for me. I'll give you the hints, but you are going to have to study this just like I did and let me tell you something, it's well worth the time to sit down and study backwardation and contango markets.

It's not enough to know if a market is inverted (backwardation) or contango, but to know what happens once it changes from contango to backwardation. Equally important is a market that is coming off backwardation...watch what happens to prices when that takes place.

I have a 20 foot eraser board in my office that covers every market, I can tell you exactly what day a market went contango and when the last time it went into backwardation. Why? because that tells me what the commercials/hedgers are up to and if they have this information, I should too... just another tool to level game out for the little guy.

Line them all up like this Crude Oil trade and you got yourself on the right side of the market with the big boys...

[Biggo]

Hi Matt

I understand what you are saying & appreciate the help/hints you continually give us.:)
I did look at Dan Scarrs site that you mentioned the other day but to be honest most of it went straight above my head!;)
I will do some more study & if you have any other resources that you think are worthy of a look that would also be appreciated:)

Cheers

Phil

[rabidsheep]

Thanks Matt,

Very interesting, I like anything that helps the underdog...:)


http://en.wikipedia.org/wiki/Backwardation

http://en.wikipedia.org/wiki/Contango

http://www.investopedia.com/articles/07/contango_backwardation.asp

http://www.fool.com/investing/general/2007/07/17/energy-jargon-demystified-contango-and-backwardati.aspx

[Angel]

Hello all,

Any good news from Matt ?

All the infos he post was very very good !!

Thanks

Happy trading

Angel