A look at the day ahead in U.S. and global markets from Mike Dolan
World markets have returned to levels of almost month ago as fears of an overheated U.S. economy abate even as corporate profit growth remains brisk.
The April miss on new payrolls and the sight of annual wage growth ebbing below 4% have been enough to switch the narrative back to a Federal Reserve which is on hold for now, rather than one that may even consider further interest rate hikes.
Morning Bid: Cooler US takes edginess off markets, UBS jumps
With the US economic calendar basically empty of key events this week it is like an addict having a tough time without his/her latest fix.
What we are left with is some revived Fed risk cut expectations as seen by slipping bond yields but little to go after on the dollar downside unless last Friday’s post-US job USD lows are threatened.
Otherwise, a mixed bag with JPY and AUD the underperformers.
EURUSD is holding up while above 1.0752, close to unchanged as it has been the benficaiory of varioius cross flows (note firmer EURGBP).
XAUUSD 4-HOUR CHART – CUP HALF FILLED OR HALF EMPTY?
XAUUSD struggling to regain momentum, after a brief blip above 2328 failed to hold.
This leaves the ranges at 2291-2332, broader at 2277-2352
Taking a cup half-empty or half-filled approach,
– Finds support as long as 2300+ trades
– Limited upside as long as it trades below 2350ish
-Revert to shorter time frame charts while within these ranges.
USDJPY 4 HOUR CHART – WHAT THE SAVVY TRADER IS SAYING
I have passed on the view of what I call the “savvy trader” (long-time GV member) and here is another one just emailed to me (note I am only acting as the messenger)
155.66 – 155.92 could be a good area to start a strategic campaign short
closes below 153 on a daily basis would not be good for the bulls
and anticipate an acceleration below 152 and 151
1st target 147.xx from which anticipate a bounce before eventually drilling for much deeper targets.
I suspect that the maximum it can drop is around 126 and then it will range back up
everything must be done with patience
SEE WHETHER YOU SAY YES/NO TO ANY OF THE QUESTIONS ON THIS SELF-EVALUATION TRADING CHECKLIST
Help! Why Can’t I Make Money Trading?
XAUUSD 4 HoUR CHART
On this chart, 2291 NEEDS to hold as support followed by a firm break of 2328 would be needed to put 2352 in play again
On the downside, 2291 needs to hold to keep a bid under the market, and thoughts of the 2277 low at bay.
The bottom line, the low is not yet confirmed and only would be if 2328 is firmly taken out.
Tom Barkin
Navigating Data Whiplash
https://www.richmondfed.org/press_room/speeches/thomas_i_barkin/2024/barkin_speech_20240506
For novices – there is a nice trendline from last weeks low in AudUsd that value is resting on at around 6620, and since Aud has good fundamental one might argue it would move higher. You must pay attention to the bigger picture though. If you look at larger time frames of analysis, 6660 could end up being a solid resistance area for bulls. AND it has the mark of the beast on it!
EURJPY 4 HOUR CHART
EURJPY correcting off the 164.00 intervention led low. This is the key level on the downside but only a move back above 167.38 would confirm a near-term low is in.
These are the key levels on this chart, anything in between is just minor.
Note, BoJ interventions, at a minimum, have restored a two-way risk although it has been in USDJPY and not on JPY crosses.
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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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