Trading over the last 8 months or so has been pretty brutal. Some many ups and downs. No doubt, a substantial amount of new Forex traders have been wiped out. It’s not the sort of climate for the inexperienced…unless you like swimming with sharks…or skydiving.
Seriously, though. There are times during an economic upheaval when you can predict with some accuracy what direction things will go, based on some event, or economic figures. Times like these present an opportunity to make large profits in a short amount of time. Think October last year for instance…the market reaction to the announced auto bailout. Infact, the savvy trader only had to keep betting the dollar against everything to make profits during that period.
This type of almost “no-brainer” trades are not available often though. If you have a long term strategy in place, it becomes a lot harder to get any action when there is so much volatility. It’s at times like these that a lot of newbie traders start to flirt with the dark side. For instance, by moving from trading Daily Charts to Hourly charts, in the hopes of taking some profits from all the noise. Some are can be quite successful at this. However, you invariably have to risk more to trade this way.
It’s like working undercover trying to infiltrate the Mob from the inside, rather than as a detective investigating from the outside. You can do more damage with the former, but it is much more risky. One major mistake could mean disaster. The lather, well it’s not quite as exciting, but you can make steady gains without having to risk your life…well not nearly as much as in the first case.
Sometimes, when things are too wild, you just have to sit back a little. Feel free to try new things every now and then, but always stick to your strategy as much as possible. Stay low on the dice throws.
In keeping with that, we will try to to jump in without proper evaluation this week. There is quite a bit of news expected affecting the major currency pairs. At this point, the potential trade is looking fairly straight-forward. If the news is decent in general (i.e. not as bad as expected), then the dollar will continue to lose steam. I should say that people have started to EXPECT BETTER NEWS. This could mean that bad news might have greater impact than, say, a month or two ago when everyone just thought everything was bad. Will keep you posted.
Happy trading