A Need To Be Flexible When Trading The News-freyja

Finance Jay Meisler has been a forex trader since the 1970s and has traded for a bank, managed a fund and been an independent trader. He is a co-founder of Gllobal-View.com, the leading forex discussion site that attracts members from over 170 countries. Traders from around the globe come to Global-View in search of trading ideas, latest news, flows and rumors => ..global-view.. The current global market is being led by episodes of risk appetite and risk aversion. The shift between the two risk extremes are often driven by economic news and measured by how stock markets react. Positive equities are viewed as an increase in risk appetite and lower stocks are seen as a rise in risk aversion. This led to volatility in the currency market as the risk element swung in both directions. The focus on stocks is not as intense as it was during the global financial crisis where currency traders reacted to every movement in equities during the period of elevated risk aversion. There have been periods where these relationships between markets have tried to decouple but appear unable to make a clean break.. This has made it difficult to trade the news as the forex market reaction to economic news has be.e more .plicated. Typically, a rise in risk aversion favors the jpy and dollar at the expense of .modity currencies and other pairs. On the other side, a rise in risk appetite generally has the opposite impact, selling of the jpy and dollar and buying of .modity currencies and others. The eur/usd is even more .plicated as sometimes it leads but more often than not seems to lag due to movements into and out of euro crosses. This also forces those traders who are used to trading the news the old way to avoid a gut reaction to sell dollars on bad economic news and vice versa. There is also the decision as to whether to react by trading the dollar outright or via crosses but this discussion is for another article. Take last weeks U.S. jobs report as an example. The dollar started the week on a weaker note but had regained some ground (jpy as well) ahead of the monthly employment release. The report showed non-farm payrolls declining more than expected. The forex market traded in anticipation of a rise in risk aversion from the employment report and this saw .modity currencies and otherd fall vs. the dollar and jpy. Stocks fell throughout the session and this kept the dollar and jpy bid vs. other currency pairs. . The reaction in the market to news tells more than the news itself. A typical reaction to good or bad news tends to support a trend. On the other hand, the ability to shrug off positive news or withstand fallout from negative news can send a clue as well to the strength of a trend. In the case of the employment report, the market reacted to negative news in a typical manner. As with any news, the prevailing trend must be taken into account when anticipating how the market might react. I call this playing by the market rules.What I mean is if the market is buying U.S. dollars on positive news and selling on bad news, then expect the market to react this way. If the market is selling dollars on positive news then look for this type of reaction rather than hoping for a return to times when the market reacted in a logical manner. In other words, the market is telling you what rules it is currently playing by and will tell you when the rules change Copyright (c) 2009 Jay Meisler About the Author: 相关的主题文章: