Trade In Choppy Markets – The Importance Of Sentiment
Just had a comment from Raza and in the back end, saying that he was staying away from the market because it was very choppy today.
Now, that’s some good advice, and when the market is in a very choppy mood, and I have to say, it is extremely choppy today on multiple news stories, that normally could determine sentiment of one way or the other. You just got to think of some of the headlines U.S., China, China waving tariffs on U.S. products. But then you’ve also got U.S., China, President Trump not wanting to re-open phase one trade deal.
But you’ve also got China who are wanting to reopen at the phase one, a trade deal. We have coronavirus expansion in Germany, as it moves above the significant R1 number, up to 1.07. So that plays into the fears about multiple waves of coronavirus. We also have a number of Fed speakers who have come out and spoken about their concerns about the U.S. economy.
We also have President Trump talking up negative interest rates. So all of these stories, and then, you know, you got Fed’s Kaplan saying to be against negative rates. So looking at all these barrage of stories and we also have Fauci speaking, who is a very respected scientific advisor on the COVID-19 outbreak from the U.S. So that in itself could change.
That’s why we’ve seen a very choppy session. We see at the moment the volatility index is moving higher and then drifting lower. We had some sudden falls in the equity markets and a little bit of a retracement since then.
And the market’s sort of literally torn between these stories. So in this event, this is why we don’t have a clear high probability currency pair to trade at present. And it’s worth as a good learning example.
It’s markets like these where you can give back your hard earned profits. So in these very choppy markets, the very best approach is often just to stay flat. To stay out of the market.
Now, it’s still worth staying around if you can, and having the because the possibility of sentiment shifting one way or the other is still there. But at present, there isn’t anything that is intraday-wise high probability currency setup.
So, obviously, do take a look at some of the swing trade ideas that we put up; they’re the latest one up there for the pound, Australian dollar. And that will keep monitoring the market to see if we get some kind of clarity in this confusion. But just wanted to say, that sometimes in a choppy market, the best thing to do is absolutely nothing.