Just had a question from Verna asking what is the hope for the retail trader to really understand complicated market moves like today?
Like even though the currency pairs are moving, sometimes hundreds of pips, there isn’t an obvious fundamental reason. What chance does the retail trader have?
Days like these are few and far between when there is multiple factors are going on at the same time. Just taking a look at this video here, multiple factors impacting markets. If you just take a look at that video, you will see some of the multiple issues that the market’s trying to digest ahead of the FOMC the Federal Reserve interest rate meeting, which is just after a very good jobs data report on Friday. And the market is really uncertain what the Federal Reserves next move is going to be. Just take a look at that.
And we see also some of the historical record breaking data points that we’ve had just today to add into the mix. And they’re relatively minor issues at that. So the question is what to do on days like these?
Well I’m reminded by a quote by Jim Rogers. This is from the book The New Market Wizards. It’s conversations with some of America’s top traders. Very famous trading book by Jack Swagger. And in that book, there’s a quote by Jim Rogers who kind of says, he uses quite a colorful description to explain his patience.
He says, ” I just wait until there’s money lying in the corner. And all I have to do is go over and pick it up.” So that kind of Jim Rogers doing nothing until it is clear.
There are days in the markets when it’s really obvious and there’s a clear high probability trading opportunity. And this is not one of those days, despite the large moves that we have been seeing. So on days like these, got a question from Carrick in the back as well. These are the sort of days when it is best just to do nothing.
Preserving your capital, not giving back your gains on days like these are what can make a difference to your bottom line. So clarity does come. It may come very quickly tomorrow after the FOMC meeting. And there may be a clear set direction. But for now the markets are remaining mixed. We’ve seen decoupling to the US Dollar, Japanese Yen and Swiss Franc. We’ve seen a mixed moves in the equity and currency space. And it’s a little bit of a confused state.
So these kinds of situations, just keeping a capital, keeping your patience and waiting for a clear opportunity, is the best approach to take. If market conditions change. And there is some clear high probability trade direction that becomes apparent, I will of course update you and let you know.