After a brief “hiatus,” the Swiss Franc is once again rising, and is now dangerously close to the $1.50 CHF/EUR “line in the sand” that spurred the last two rounds of Central Bank Intervention.

Both from the standpoint of the Swiss National Bank (SNB) the Franc’s appreciation is vexing, while from where ordinary investors are sitting, it’s downright perplexing. That’s because based on the standard litany of factors, the Franc should be falling.

The Swiss economy remains mired in its worst recession in 17 years, and is projected to shrink by at least 2% this year. In addition, deflation has already set in, with prices falling at an annualized rate of .8%. To be fair, signs of recovery are emerging, and a plurality of economists believe that growth will return in 2010, as will inflation.

But downside economic risks remain, namely the worsening labor market. There is also the fact that the Swiss economy remains heavily weighted towards exports, the demand for which remains slack. From a comparative standpoint, though, projections of recovery are not unique to Switzerland. Financial markets have long since stabilized in most industrialized countries, which many have interpreted as a harbinger for better things to come.

On the monetary front, Swiss interest rates remain among the lowest in the world, as the SNB has gradually guided its benchmark lending rate to .25%. It is also in the process of expanding its quantitative easing program, by pumping liquidity directly into the credit markets, in order to mitigate against deflation. In this sense, the SNB is arguably behind the curve. In the US and EU, for example, speculation is already mounting that interest rate hikes will take place as soon as 2010. Economists are less concerned about a shortage of liquidity in those economies, and more nervous about how the potential excess of liquidity can be withdrawn from the financial system before it turns into a problem. Economists in Switzlerland aren’t even close to beginning to have that conversation.

According to the SNB, the problem lies in the Swiss Franc, which has remained oddly buoyant. While capital has flowed out of the US, for example, it actually seems to flowing into Switzerland. Members of the SNB have attributed this to the “safe haven,” notion, whereby investors still view the country as a safe haven from the financial turmoil. Perhaps slightly irrational, but real nonetheless.

Despite strong rhetoric and equally strong action, the Franc has slowly edge back to the 1.50 mark. Policymakers have pledged to defend the currency vigorously, and it now appears as though another intervention is looming. Given that the SNB has intervened to depress the Franc twice in the last six months, you would think that it would have some credibility with some investors. It seems the lesson is that Central Banks are no match for the markets, and investors realize that ultimately, the SNB is no exception.

One of the interesting things about forex trading is how much you learn about human psychology. In the last few months since I started paper trading forex with Metatrader, first by myself then with an expert advisor, I have learned a lot about the way I think and react to my successes and failures in the financial markets.

“Pulling the trigger” is a phrase that traders use in regards to taking the action of placing a trade. Now when it comes to using an expert advisor or “forex robot” as they are called colloquially, the action of placing a trade is taken by the computer program. However, a far more consequential decision is the decision to purchase the live version of an EA and actually start live trading.

I myself have not yet taken that decision, and for a number of reasons I am glad I have waited to perfect my strategy before rushing out and letting a robot loose on my live account. The main reason is that, before I started I had no idea just how easy it was to make a rash decision like cranking up the lot size on my account without thinking about the consequences. On the other hand, waiting too long to get into the market can also be counterproductive. Time is money, and no more so than when you are forex trading. Compounding your trading profits takes months, and the sooner you start the sooner you can reap the benefits of your forex robot.

So I will wait until the graph below shows consistent upward progress for a few more months, and then commence live trading. There are 24 members who have taken up a free membership with Forex Goldmine since I joined their affiliate program and placed links on this blog, some of whom are  presumably testing the free demo version of Robominer, so I hope if any of you are reading this post, that you would feel free to contact me or comment on this blog as I would be keen to know how your trading is going and when you go live, to share in your progress.

I know it could be a challenge for some to have a computer set up online 24/5 for trading. I myself never throw away an old PC while it is still working, so I just use an old one with a RAM upgrade which surprisingly works quite well with the Windows 7 Pre-release beta version installed on it, and it just sits in my garage trading forex for me while I am at work or asleep. With a wifi modem it’s pretty easy to have it online without affecting other computers in the house, and I’m sure one of these days it will pay its way! It may even pay for a full version of Windows 7 for itself before the beta version expires!

So, whoever pulls the trigger first, please post on this blog and we’ll see who hits the target. Perhaps not $20 million but even a real profit of $2000 or even $200 on a smaller account, should be achievable before the end of the year. Watch this space.