Underlying Premise Asserted

Lifting my GBPJPY hedge before Wednesday and bolstering my existing dollar longs and european shorts was a timely maneuver as the US payroll and unemployment numbers as well as (I suspect) Swiss and ECB interventions brought both the franc and euro, and squaring off all my existing positions to the profit side.

I feel mildly vindicated by this, but emotional comforts aside, I’m also encouraged that my ongoing strong-dollar thesis is still applicable. The lesson of the past weeks is that playing contradictory theses such as the GBPJPY long hedge against my existing positions is justified not merely as a trade but primarily a protection to core positions, especially when the fact of the matter about trading is that you can never get your timing right most of the time, despite the soundness of the economic argument.

The opposite of this scenario is when the contradictory thesis turns out to be the correct one–in which case the painful part will be liquidating the core position. My only hope is if and when that happens, I’ll also know how to act without hesitation.