Today’s Key Market Drivers: 27th November 2018
“Mario Draghi is another significant voice of concern surrounding global growth.”
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European Central Bank chief Mario Draghi speaking at the European Parliament in Brussels became another significant voice in financial markets to acknowledge slowing regional growth. His comments sent the Euro lower after initially rallying for most of the Asian trading session. Draghi did confirm that the ECB was still on track to wind up its stimulus program in December but the news of no more artificial money printing at the ECB wasn’t enough to save the Euro which continues to weaken against most of its rivals after recent weaker than expected economic data. The Euro was being supported throughout the Asian and early European trading sessions on Monday by hopes of a revised Italian budget but those hopes faded as the day dragged on.
It was one step forward and then two steps back for the base currencies that trade against the US Dollar on Monday. The AUD, NZD, EUR and GBP were all trading higher leading into the US trading session but pulled back sharply after US stock markets and the US Dollar took off when Wall Street opened for business. The 10 Year US Treasury Yield rose and helped drag the greenback higher and we are now back at Monday’s opening prices for the base currencies that trade against the Dollar. The safe-haven currencies such as the Yen and Swiss Franc were sold as trading sentiment turned positive. As I explain in my daily video update today it is tough to make money when currency markets are so range bound with the only real stand out performer being the US Dollar v Yen which has rallied strongly since Thursday.
Today’s economic calendar shows nothing in the way of high impacting news, however, we will see the release of New Zealand Trade Balance numbers at 8.45am AEDT which as the potential to move the local currency if out of line with expectations. US Consumer Confidence data is due at midnight AEDT tonight.
It is important to remain patient with your trading strategy and appreciate no two months of price movement and volatility are going to be the same. As humans we like certainty and in financial markets, you don’t get certainty you get probability over a series of trades which needs to be played with a high degree of consistency and discipline surrounding the risk management. If there is one aspect of your trading that can always improve it is the area of volume sizing trades and ensuring you are focusing on your downside risk first before giving consideration to the upside potential.
Don’t worry about what profit you might miss out on, worry about what your total risk exposure is in the market at any one time, which I believe should not exceed 3.5%. If it means selling down volume as the market goes against you to ensure you don’t exceed 3.5% then do it. How many times have you sold volume as the market has moved against you? Not many is my guess if ever, but I bet there has been plenty of times you have sold down volume as the market has moved in your favour to lock in profit. Think about that. If you are prepared to sell down volume as the market moves in your favour why would you not sell down volume as the market moves against you? Because traders like to live in hope. Remember we are playing a numbers game.
Have a great Tuesday.
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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