Today’s Key Market Drivers: 23rd May 2019
US Federal Reserve Minutes confirm no rate hikes are on the cards any time soon.
The minutes from the last US Fed meeting showed that committee members are satisfied with the current “on hold” approach with respect to interest rates even as the US economy continues to remain robust. The minutes said, “members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time.” It is important to note the last Fed meeting was held before Donald Trump decided to increase trade tariffs to 25% so the market was aware the minutes would not reflect the recent escalation in trade tariffs.
The US Dollar remained reasonably range-bound through Wednesday’s trading session and in today’s video update I share with you what I monitor and review once I am in a trade.
UK CPI misses estimates as Pound gets hit hard on Brexit woes.
The Pound took a beating at the start of the European trading session on Wednesday following weaker than expected CPI and more worrying signs British PM Theresa May is losing the support of her colleagues surrounding her latest Brexit deal. CNBC reports this morning that Andrea Leadsom the House of Commons leader resigned on Wednesday saying she could not announce the new Withdrawal Agreement Bill in parliament on Thursday as she did not believe in it.
It seems increasingly likely Theresa May will be forced to step down as she simply cannot get the support she needs to make a workable Brexit deal happen. Her proposal this week included a vote on whether to hold, wait for it, a second Brexit referendum.
UK Inflation data only just missed estimates for April coming in at 0.6% vs the 0.7% economists expected. The inflation miss wasn’t the reason why the Pound sold off so strongly at the London open yesterday, the selling was coming as a result of Brexit woes.
Whilst the Pound is off its lows this morning if political uncertainty grips the UK once again it’s tough to make a case as to why any investment bank or hedge fund would want to buy the Queen’s currency any time soon.
Before you enter a trade, you are not taking notice of price action or how long the market takes to move 50 – 100 or 150 ticks or how often it ranged up or down. In fact, if I asked you how long it takes on average for the AUD v USD to move 75 ticks only a tiny percentage of members would get close to the right answer.
The reason why I am making this point today is that once you enter a trade your attention and focus immediately turns to a different mindset. You are now thinking about time, price, stop loss, profit target, loss, win, and a whole host of other emotional reactions that entice you to self-sabotage. You are generally far more impatient and at times emotional because your money is now at risk.
The reality is the only person that cares about your money is you. The market could not care less if the price ticks up or down, it’s simply doing what markets do when people buy and sell. When the price moves in your favour you are feeling comfortable but the moment it moves against you the feeling turns uncomfortable. I get it! I’ve been there but what I have been able to teach myself over many years is to detach myself from the money. You must learn to develop a mindset of “I don’t’ really care”. Now, of course, I do care, but I don’t care about this one trade. If the price moves against me or for me it does not mean that the ultimate outcome changes.
Trading is a game, it’s the most challenging emotional game you will ever play in your life but once you master “the art of detachment” you have hit the ultimate jackpot.
My final return on investment for 2018/19 will not be defined by one trade, it will be defined by a series of trades over the past 12 months. Yes, I care about each trade I enter but what is more important is that I consistently follow the correct rules of engagement that will give me an edge over a series of trades.
When the dark clouds form and you can hear thunder and see lightning in the distance the probability is rain is on the way. But you are not guaranteed that it will rain. There will be times that the storm will miss where you are and it won’t rain one drop, but if you wait for the dark clouds, hear the thunder and see the lightning and only then you bet on it raining every time this happens the probability is that it will rain more often than not. That’s exactly how I approach my trading.
Keep it simple. Lose small. Win bigger.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular keynote speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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