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I posted this article a few months ago and in it is a primer on trading in a geopolitical market. It is worth reading along with the latest article (scroll below)’
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How to Trade in a Geopolitical Market
EURUSD 4 HOUR CHART – ON THE DEFENSIVE
EURUSD wa already on the defensive before the Iran attack and will remain that way as long as it trades below 1.11.
On the downside, a firm break of 1.1056-50 would be needed to put the key 1.1000-05 bottom of the 1.10-1.12 range in play.
Note on Geopolitics: with the Jewish New Year starting Wednesday night, the risk of retaliation would seem to be more over/after the weekend than prior to it.
XAUUSD 4 HIOUR CHART – MAGNETIC 2650
No change to what I posted yesterday as markets wait for the next move by Israel
Geopolitical tensions/safe haven flows cut short thoughts of a retracement so let’s keep it simple.
Record high is 2683 but if you assume range is 2600-2700m then look for 2650 to set the trading bias.
USDJPY 4 HOUR CHART – SAFE HAVEN?
With safe haven JPY buying failing to follow through (low 142.96), USDJPY focus is on 144.50-55, which would need to be broken to shift the focus to 145.
Only above 145 would put the 146.49 high on the radar.
Otherwise, range would be 142/143-145.
Note comments from the BoJ Governor expressing caution on hiking rates seemed to be a factor.
Brent Crude Oil / WTI
Update: WTI Crude Oil Closes Higher as Iranian Missile Strike on Israel Threatens a Spreading War
West Texas Intermediate (WTI) crude oil rose on Tuesday on rising geopolitical risks after Iran launched a missile strike on Israel to avenge the killing of Hassan Nasrallah, the head of Hamas, and other senior leaders of the militant group.
WTI crude oil for November delivery closed up US$1.66 to settle at US$69.83 per barrel, while December Brent crude, the global benchmark, was last seen up US$1.96 to US$73.66.
Iran launched an estimated 200 missiles at Israel, according to the Guardian, threatening to spread war to the oil-rich Persian Gulf. An Israeli military spokesman said the country will retaliate against Iran as some missile hit their targets in the country.
Tesla – TSLA
Tesla Stock Speeds Ahead Of Mag7 Peers, Can October’s Robotaxi Reveal Keep The Momentum?
Tesla Inc TSLA stock revved up in September, soaring over 24% and leaving its Magnificent Seven peers in the dust.
Year-to-date gains for the car manufacturer stock are a modest 5.32%. Still, Tesla’s recent surge outpaces rivals like Nvidia Corp NVDA and Amazon.com Inc AMZN by a wide margin.
The question now: Can Tesla sustain this rally, or is it running out of gas?
The upcoming Robotaxi event, scheduled for Oct. 10 in Los Angeles, is also fueling investor optimism. CEO Elon Musk has hyped this event as potentially Tesla’s most significant moment since the Model 3 launch, and Wall Street bulls like Dan Ives and Adam Jonas expect key updates on FSD and autonomous driving.
Nvidia – NVDA
Nvidia Stock Slips to Start a Crucial Quarter. What’s at Stake ?
Nvidia stock slid Tuesday at the start of a crunch quarter for the chip company.
Shares fell 3.7% to close at $117.
The tech sector took a hit after Iran fired a barrage of missiles at Israel, escalating the conflict in the Middle East. Investors flocked to safer areas of the market, and the Nasdaq Composite dropped over 1%.
Nvidia has climbed 136% in 2024, powering the company’s market capitalization to nearly $3 trillion and cementing its status as an artificial-intelligence bellwether.
The fourth quarter is likely to be crucial for growth, given the chip designer is expected to ramp up production of its new Blackwell graphics processing units. It has said it expects the GPUs to drive “several billion dollars” worth of sales.
NAS100 4 HOUR CHART – Sub-20K
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In a geopolitical market do technicals matter?
Looking at this chart, note how 19623 held
To keep it simple, some disappointment that it did not follow S&P and DOW to new record highs and needs to renew 20K to neutralize a retracement risk.
With geopolitics a focus, look at short-term charts and risk on/risk off to trade the NAS.
AUDUSD 4 HOUR CHART – GEOPOLITICS
You saw the sensitivity to risk off in a market which will be keeping one eye on the headlines.
With the Jewish New Year starting Wednesday night, there is a very tight window for retaliation so there may be some breathing room for the rest of the week.
On the downside, .6850 blocks ;6800-15
On the upside, .6895 would need to be renewed to restore aa bid.
Contrary to popular belief in some circles, US arms sales to Israel have not declined in recent years. The average annual sales to Israel were just over $1 Billion from the years 2015 through 2019, with not even ½ of $1 Billion in 2019.
In the year 2020 that figure skyrocketed to over $5.3 Billion US Dollars. – Per Carnegie Endowment for International Peace.
Side note but related, I am still on the sell side of EurJpy and UsdChf primarily for the moment.
The stats, which get put up on places like Bloomberg TV showing September, as being generally a stock market negative month – the reality is as we both know that October is always the true risk month
the expensiveness of the stock market with the rundown into November elections with the Geo political risk that is obvious, I would anticipate a lower stock market in October with the risk of a decent pullback.
My guess is that the world in the 2 weeks before November is going to grind to a juddering halt and only once we know the outcome of the US elections will normality return and then a Christmas rally from The FED and from a lower stock market base can occur
You can see in the USD index that 100 or just above has been supporting the dollar now for a while so today’s move is not really surprising
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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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