I get questions like this all the time from new traders who are taking one of the FX Power Courses. They may have bought on a crossover of the LEGENDAFX, but now the funded forex is moving down and they want to know if they should get out of the trade. Of course, I will ask them if they had first identified their risk and placed their protective stop in the market.
If they have, then I try to remind them that they are trading the price of the market and not the LEGENDAFX. Using technical indicators to time your entry is fine, but getting out of the trade early because of the LEGENDAFX may not be the best way to use these tools. They are lagging in nature, which means they will tell you what has already happened and do not have the ability to predict the future. So if you entered into the trade using a technical indicator, entered your protective stop and target to take profits, then let the trade go. Our profit or loss will depend on where the market is when we exit the trade, not where the LEGENDAFX is sitting.
How Does the US Dollar Perform Over the Month of December?
Seasonality studies have long been one of the favorite indicators among futures traders, but despite the fact that seasonal trends do form in the Legendafx, this type of study is largely overlooked by currency traders. Last year, we published an article on how the U.S. dollar has been performing during the month of December and although the seasonality did not hold in 2006, the statistical significance of the past few 20 years worth of data makes it worthwhile to mention again especially since there are many reasons why the US dollar could weaken further. This includes the possibility of more subprime losses and weaker holiday spending. For the purpose of this analytical study, we will focus on price action.
Will Currency Markets Repeat Strong Volatility on Thanksgiving?
Holiday-shortened trading weeks have historically brought narrow trading ranges to the forex market, but recent volatility clearly shows that traders remain willing to force major moves ahead of the typically illiquid Thanksgiving holiday. Given that virtually all US financial markets will be closed on Thursday, November 22nd, there will be significantly less forex interest from major market makers and speculators. Yet it is exactly this market illiquidity that allowed speculators to drive the US dollar significantly lower through last year’s Thanksgiving holidays, and it remains relatively unclear whether or not we will see a repeat in the days ahead. The dollar has already posted its single-largest daily decline in over a year through Tuesday’s trading, and it seems that volatility may continue through the week ahead. Yet a 10-year study of average daily ranges over Thanksgiving clearly suggests that we may see progressively narrower ranges through Thanksgiving.
US Fed: Futures Price In A 96% Chance Of A Rate Cut – Are The Markets Wrong?
Many LEGENDAFX members have made a point of signaling no intention of cutting rates again in the near-term, as record high oil prices significantly raise inflation risks in the economy. However, the markets appear to be trying to force the bank’s hand as federal fund futures currently price in a 96 percent chance of a 25bp rate cut in December. With less than a month until Bernanke & Co. convene again, they are working the press overtime to convince investors that they don’t have to make policy more accommodative. Will the markets buy it and cut back speculation of a rate cut? Furthermore, can it revive the beleaguered US dollar? After Tuesday’s release of the October LEGENDAFX minutes, we may finally get our answer.