Today’s Key Market Drivers: 26th September 2018
“All eyes are now on the US Fed statement Thursday morning 4.00am AEST?”
The markets on Tuesday were generally calm as I expected with the US Fed’s September policy statement due Thursday morning at 4.00am AEST. The US Central Bank has already raised rates twice in 2018 and the market has 100% priced in their expectation of another rate hike tomorrow and one more likely in December. So, there is no “new news” regarding interest rates in the US for the balance of 2018 but 2019 remains a different story with many traders, me included, expecting the US Fed to slow the pace at which it is raising rates next year and I am looking for them to announce it this week. If they announce this to the market in the statement or press conference then the US Dollar is likely to weaken and this would assist any traders who are long against the US Dollar. I must warn you that there is every possibility that the Fed may fuel another US Dollar rally tomorrow if they decide to issue a hawkish statement about the economy and future rate hikes. Generally speaking, Central Banks are conservative by nature and the probability is they’ll err on the side of caution.
I am a big believer in sharing with you everything I think you need to know, but nothing more. I am not here for financial entertainment like a newspaper or online financial website. I am here to share with you where the balance of probabilities lie with respect to trading opportunities and what economic data is going to impact markets. The US Fed statement is the one and only piece of data the market really cares about this week. Sure, the RBNZ is issuing their statement tomorrow morning at 7.00am AEST but it won’t overshadow the US Fed’s comments and I doubt the RBNZ will change its mind this soon, after saying recently it won’t adjust the official interest rate until 2020.
Yesterday I caught up with a trader for a chat and we were discussing behaviour patterns that traders experience once they enter a trade and I wanted to share with you part of our discussion. Often traders will self-sabotage trades after they enter due to the fact they try and justify to themselves why the trade will or won’t work after they enter. Big mistake! As an example, you may decide to take a long position on a currency pair and moments after you’ve entered the trade you start going back and forth to the chart, flicking to different time frames and reviewing indicators trying to convince yourself the trade will work or in many cases now won’t work and coming up with reasons to adjust levels to protect risk. That sort of trading behaviour is incredibly damaging but is extremely common.
Sure, there are events and circumstances that will impact your trade once you enter but if you are doing analysis after you get into the trade to whether or not you think it will work then you didn’t do your homework correctly before you entered the trade, to begin with. You don’t enter trades and then go back over to check if the setup is right after you are locked into a position or if there are indicators that might swing the trade the other direction. Every piece of available analysis must be done before you enter the trade and there should never be a question of “maybe or maybe not”. Either the trade meets the criteria or it doesn’t (you can’t be half pregnant) and if you find yourself backtracking over an open trade using indicators to try and justify your decision then you must stop this immediately. Do your homework before you enter a trade and get clear, calm and decisive. Back your system, back yourself and focus on the risk and reward.
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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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