I’m so ronery! Kim Jong Il and the role of future predictions market

I woke up this morning to reports of North Korean artillery fire against South Korean islands.  These two nations are always taking pot-shots against each other across the DMZ however it’s fair to say that firing 200 artillery shells is more than a pot-shot.   “Old Kim Jong Il’s upto his old tricks” I thought. 

You see me and Kim Jong Il have history.  About May of  last year I was short the US Dollar vs the Japanese Yen and was doing very nicely from the exercise.  That is until old Kim rather selfishly decided to test a nuclear weapon one Sunday night/early Monday morning which sent the South Koreans, the financial markets and the Japanese Yen in particular into a paniced frenzy. My position was closed out for a very small profit during the volatile period. Boo Hiss. Thanks Kim.

So today would also not have been a good day to be buying Japanese Yen thanks to Kim Jong Il. Is it any wonder he’s so ronery?

Strangely enough last week I was also once again trading the USDYEN on an end of day position basis which is a very rare occurence for me. This time the position was closed out for a small loss after a spike up at the end of last week.  I suspect that a sample of two incidents in 15 months is hardly enough data to constuct a theory but could it be possible that when FXTraderPaul starts putting on end of day positions in the USDYEN that our South Korean friends should start to get a little nervous? 

I appreciate that I’m being somewhat facetious about what is no doubt a very serious issue.  And I certainly have no desire to see conflict on the Korean peninsula.  However it does revive my interest in a little known area of trading I used to be involved with many years ago.

I’m talking about Future Prediction Markets.  About 6 years ago just as I was starting my FX trading journey I was inspired by this article ‘Markets in Mayhem’ in a Sunday Paper.  I would suggest reading the full article.  I will let you draw your own conclusions about Futures Prediction Markets.   There will be people here who would find the idea of trading contracts on the likelihood of possible future outcomes somewhat beyond the pale.  There will be others who think it’s fair game.  I’ll let you be the judge.

Here is the present chart relevant to Korea.  Not surprisingly it’s woken up a bit today. 

US.ACTION.NKOREA.DEC10 22:04.

Just something different to think about.