6 May 2024 – A look at the day ahead in U.S. and global markets from Mike Dolan
World stocks (.MIWD000000PUS), opens new tab notched new records and the dollar (.DXY), opens new tab nursed its worst day of the year as fears of an overheating U.S. economy dissipate – stirring hopes that the coast is clearing for Federal Reserve easing at last.
Morning Bid: New highs hold as disinflation resumes, US cools
XAGUSD – Silver – Monthly
I was playing with this puppy like 25 years ago, but as I avoid anything that has mixed liquidity I avoid it as well.
But one of the Internet “Gurus” provoked me to take a closer look…Guy is calling for immediate reversal , talking how he’s selling it ( oh gimme a break…you might be selling eggs on the farmers market somewhere, but not this) on every uptick and blah, blah, blah..
He is declaring the double top ( No it’s not – we had a marginally new high already this month ) , and only problem that I see here is that 50% Fibo line just above the head – about 30.500-31.000.
However, pattern suggest more to come….so let’s see
To me more important is that trend line above at 31.600 – if above it, it can fly….
GBPUSD DAILY CHART –
GBPUSD tested 1.27, just shy of the key 1.2709 level but has since backed off.
tHE STRAIGHT LONE MOVE UP YESTERDAY LEAVES LITTLE IN THE WAY OF OBVIOUS SUPPORT SO EITHER LOOK AT SHORTER TIME FRAME CHARTS OR USE RETRACEMENT LEVELS.
In this regard, check out our FIBONACCI CALCULATOR and calculate FIBO levels for whatever time frame you are looking at, such as 4 hour chart
BTC DAILY CHART – DO TECHNICALS MATTER?
Technical traders may like this but I am not sure about how valid technical levels are in something that can move 5-10% in one day.
This is why I prefer to focus on psychological or what I call “magic” levels such as 60k,65k, and 70k.as well as the pattrtns formed on a chart
In this regard, 65000 is now a key level that needs to hold to put 70000 back on the radar.
If I was focusing on levels 65478 is support and 67166 is a key resistance.
EURUSD 4h
The way I draw my charts
I am going to skip on levels – I want to explain few things here and I will elaborate at length in an article later on.
The trend lines that I come up with ( you probably have seen that sometimes they don’t have much sense in the beginning – there are no “at least two lows/highs to connect”, but later on they prove right…
For now please just bare with me, and look at this chart – I am sure you all have an urge to buy it right now , but is it the right thing to do?
Well, yes it can hit another leg up from here, but more probable is to have at least some kind of a correction first – be it a real wave down or just some sideways one with few downticks – and this is the game of probability and timing !
The trick is to wait for the right pattern to emerge and follow it . That much from me for now…
USDX DAILY CHART – BREAKDOWN BUT..
The break of 104.61 confirms a downtrend but to remove all doubts 103.93 and the trendline need to be taken oit.
On the upside, USDX needs to stay below 104.61 to maintain the breakdown.
NOTE THE USD DOWNMOVE STARTED LAST WEEK WITH A JUMP IN US WEEKLY JOBLESS CLAIMS. THIS ELEVATES THIS REPORT IN IMPORTANCE ON THURSDAY.
Forex Forum Ad Hoc Glossary
What is Risk Management in Trading – Forex Forum
For any trader, managing risk is essential to success. But what exactly is risk management? In this blog post, we’ll explore what risk management is and how it can help you become a successful trader.
We’ll also look at some common mistakes that traders make when it comes to managing their risks. After all, if you’re not managing risk appropriately, you’re just a gambler. So if you’re ready to learn more about risk management, read on!
What is Risk Management in Trading?
Risk management is the process of assessing, controlling, and managing risk within a trading portfolio. This involves defining trading goals and understanding potential losses that could occur as part of the trading process.
It also includes identifying potential risks, such as market volatility or sudden changes in the market, understanding how these risks can affect your profits, and taking steps to limit potential losses.
In general, risk management should be a priority for all traders. By properly managing your risks and using effective strategies, you can minimize potential losses and increase the chances of making successful trades.
Common Mistakes When Managing Risk in Trading
Unfortunately, many traders make mistakes when it comes to managing their risks. Here are some of the most common mistakes that traders make when it comes to risk management:
Not Setting a Trading Plan:
Many traders don’t have a detailed trading plan, which is a key component of risk management. Without a trading plan, traders are more likely to take risks that could have otherwise been avoided. It’s important to establish clear trading goals and a plan for how to reach those goals.
Not Understanding Risk:
Many traders fail to understand the risks associated with certain trades, which can lead to serious losses if they don’t take the time to research and understand the risks involved. It’s important to have a thorough understanding of the markets you’re trading in before taking any risks.
Not Taking Advantage of Stop Losses:
Stop losses are an essential component of risk management, as they help to limit potential losses in the event of a market downturn or sudden changes in the market. However, many traders don’t take advantage of stop losses and end up taking larger risks than necessary.
Over-Trading:
Over-trading is a common mistake made by many traders. This involves taking too many trades, which can lead to losses if the market turns against you. Look, all traders love the price action. It’s exciting to take a position and watch your P/L go up and down. But don’t become addicted to the price action for the sake of just having a position. It’s important to only take trades when the setup is right and avoid over trading.
Not Diversifying Risk:
Diversification is another important part of risk management. By diversifying your trades, you can spread out risk and limit potential losses if the market turns against you.
Why is Risk Management Important in Trading?
Risk management is a critical factor in success when trading in the markets. It involves understanding and controlling what could potentially impact your trades and actively analyzing scenarios that may occur.
Without proper risk management, traders are leaving themselves vulnerable to potential losses which could be catastrophic for their investments.
Good risk management also allows traders to effectively assess opportunities and make better decisions that take into account volatility or leading indicators of future market performance.
Simply put, risk management can provide peace of mind so traders can enjoy the highs of profitable investments while minimizing losses when markets start to dip.
What are Some Common Risk Management Strategies?
Common risk management strategies used by traders include setting stop-loss orders, limiting capital exposure, and diversifying investments to minimize volatility.
Another essential approach for traders is to set predetermined targets for both profits and losses to help stabilize your exposure. To further limit potential losses and maximize gains, traders should always be aware of economic news and other world events that might affect the market.
How to Implement Risk Management in your Trading Plan
Implementing effective risk management into your trading plan is incredibly important for successful and profitable trading. It can help you to control the amount of draws you take in any given trade, and it can also protect against large losses which could potentially wipe out your entire trading account.
A good risk management plan should include determining the amount of capital at risk on each trade, setting predetermined stop-losses to limit downside exposure, and having a strict, disciplined approach towards minimizing losses:
never increasing position size
never risking more than you are comfortable with, and always controlling potential risk-reward ratios.
Taking the time to set up a comprehensive yet flexible risk management plan will put you in a better position when it comes to positive returns in the long run.
Risk management is an important part of trading. It allows you to trade with less stress and more confidence. There are many different risk management strategies, so it is important to find one that fits your trading style.
Proper risk management can help you make money in the long run by preserving your capital and preventing you from making careless mistakes.
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