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As we wait for the Fed to make its widely anticipated interest rate decision, this is one that could go either way. The debate is not whether the Fed will cut rates but by how much.
As any trader knows, it is the reaction to news (e.g. economic reports, monetary policy decisions0 that counts. This is where the saying Buy the rumor, sell the fact comes from. It also reminds me of the old trading adage, It is the reaction to news, more than the news itself that matters.
Will There Be a Forex Trading Surprise This Week?
Nasdaq – NDX
Nasdaq composite: Once again, it’s make-or-break for breadth
Dow futures up slightly, S&P 500 slip, Nasdaq 100 off ~0.5%
Sep NY Fed Manufacturing index 11.5 vs -4.75 estimate
Euro STOXX 600 index off ~0.1%
Dollar down; bitcoin off ~2; gold edges up; crude up >1%
U.S. 10-Year Treasury yield ~flat at ~3.66%
NASDAQ COMPOSITE: ONCE AGAIN, IT’S MAKE-OR-BREAK FOR BREADTH The Nasdaq composite IXIC is still down more than 5% from its record highs. That said, the tech-laden index is on a five day win streak, and just posted its biggest weekly rise since early-November 2023.
S&P 500 – SPX
S&P 500 ends little changed as early gains fade before Fed decision
Microsoft gains after new share-buyback plan, dividend hike
Intel gains following collaboration with Amazon’s AWS
Retail sales unexpectedly rise in August
The benchmark S&P 500 index touched 5,670.81 earlier in the session, after fresh economic data eased worries of a sharp slowdown in the U.S. economy.
USDJPY 4 HOUR CHART – Watch 142
let’s keep it simple:
1) Failure ti stay below 140 has seen a rebound… price action suggest JOY crosses have been a factor
2) Need to hold above 142 for 143.04 ro be a target… Look for 142 to be pivotal in setting the tone
3) Only back below 1541.40 would put 140 back on the radar.
As USDJPY sniffs at 142 again, here are retracement levels for 161.93-139.57 using our Fibonacci Calculator</a>
US500 4 HOUR CHART – New High Then….
It seems more logical for caution TO set in after setting a new record high given early price moves seemed to be driven MORE by money market pricing shifting in favor of a 50bps Fed rate cut than the actual event.
In any case, it is still more than a day until the Fed decision so expect defense more thaN offense to dominate until that time.
I suggest reading the articles in our blog for a view on whether the Fed will cut by 25 or 50bps.
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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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