When you were trading the currencies actively, were you getting up through the night because you were worried about getting caught on the wrong side of a major move before the markets opened in the U.S.? Yes.
Did you always trade that way, or did you get caught enough times so that you started trading around the clock? It happened enough times to make me leery.
There would be a big gap move that you could have avoided by trading overseas? That is right. For example, I remember one time, during late 1978, the dollar was getting battered, falling to
new lows every day. This was during a period when I was cooperating and trading as a colleague with Brace Kovner.
We used to talk hours every day. One day, we noticed that the dollar got mysteriously strong. There was an intense
price movement that couldn't be explained by any known information. We just bailed out of our long currency
positions like crazy. That weekend, President Carter announced a dollar support program. If we had waited until the
next U.S. trading session, we would have been annihilated.
That situation illustrates one of the principles we believed in— namely, that the big players, including the
governments, would always tip their hand. If we saw a surprise price move against us that we didn't understand, we
often got out and looked for the reason later.
I remember that market well. The currency futures markets were locked limit-down for several days in a row after that announcement. You must have gotten out right near the top of that market. We made a great exit on that trade. Anyway, my point is that I believe, as a courtesy, the European central
banks are notified about major changes we are going to make, and they often act ahead of U.S. policy an-
nouncements. Consequently, the price move shows up in Europe first, even if it is because of something we initiate. If
it's an action initiated by the Europeans, the price move is certainly going to occur there first. I think the best hours
to trade are often in Europe. If I had a period in which I was going to devote my life to trading, I would want to live in
Europe.
