Today’s Key Market Drivers: 24th July 2018
“Reuters report says the BOJ may be about to adjust its monetary policy program.”
There was no high or medium impacting news scheduled on Monday, however, there were rumours doing the rounds that the Bank of Japan was thinking about adjusting its monetary policy program in coming months. Currently, the Bank of Japan has the official cash rate below zero and is still continuing to print trillions and trillions of Yen and pumping this money into the Japanese economy in an attempt to boost inflation. The current program at the BOJ has been going on for years and the impact and success of the below zero rate policy and money printing program is questionable. The rumours began after a report was issued from Reuters News Agency and whilst the report has not been confirmed by the BOJ it didn’t stop traders from buying up the Yen which was already being bought higher following a weak start to the week on global stock indexes. The next BOJ statement is a week away on July 31st so the market will have to continue to guess and speculate until the BOJ confirms or denies the rumours. The Yen is a safe haven currency in times of uncertainty and after Donald Trump’s aggressive Tweet towards Iranian President Rouhani on Monday the mood was generally “risk off” trading. Trump’s Tweet said…”To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!”
As global stock indexes started the week on the back foot the US Dollar regained some lost ground with US Treasury Yields (the interest the US Government pays people who lend it money) rose. There is no high impacting news today with Wednesday’s Australian quarterly inflation data being the first piece of high impacting news for the week.
I have a question for you. Would you bet more on a trade if over 3 or 4 years that trade showed a success rate of between 80% to 90%? The vast majority of people answer this question with a Yes. In fact, what most traders do is substantially increase their volume on a trade after they achieve a winning streak with that system. The answer to the above question should be No. What happens when traders have a false sense of security and think a trading system is correct the vast majority of the time is they increase their bet sizes far too much. Just because a system over a period of time has shown a success rate of 80% or 90% (this NEVER lasts) doesn’t mean it can’t lose once, twice or even three times in a row. By increasing your bet size substantially you are increasing the likelihood of drawing down big time on your account when it does lose, and it will! If you want to increase your volume size on trades do it gradually, ever so slowly, incrementally so as one, two or three losing trades in a row isn’t going to wipe out months and months of gains.
If you continue to watch the Bullish n Bearish indicator and learn to recognise the wave cycles within my daily video report I am very confident that you will avoid stop outs by ensuring you are entering trades in the direction of the wave count that is happening on the 4 hour or daily charts. For example, if you are looking to enter a trade, check the bullish n bearish indicator to ensure that the wave count is going in your favour.
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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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