As the summer nears an end, activity in the markets is expected to rise. Not only are traders returning from vacations, but the busy calendar suggests even more action than usual.
What can traders do to get ready for this change? Here are three things.
The debt crisis in Europe returns, with big hopes but also fears. Details about the ECB’s big bond buying program are highly anticipated as well as the ruling of the German constitutional court regarding the legality of the ESM bailout mechanism. All this relates to the situation in Spain. In addition, the troika delegation is returning to Greece to see if Greece made progress. Add high expectations towards the Fed decision and many other events, and you have an explosive mix.
So, here is what you can do:
What can traders do to get ready for this change? Here are three things.
The debt crisis in Europe returns, with big hopes but also fears. Details about the ECB’s big bond buying program are highly anticipated as well as the ruling of the German constitutional court regarding the legality of the ESM bailout mechanism. All this relates to the situation in Spain. In addition, the troika delegation is returning to Greece to see if Greece made progress. Add high expectations towards the Fed decision and many other events, and you have an explosive mix.
So, here is what you can do:
- Stay up to date: The aforementioned events are the biggest ones. There are many more events scheduled and news breaks out unexpectedly. Stay tuned with what’s going on – the news could be dramatic to trigger big moves, and it’s important to know why and if the moves are expected to be sustained.
- Consider trading crosses: Often, the risk events cause excessive volatility that makes trading quite choppy. If you want to skip the action caused by some US indicators and focus on longer term moves on other currencies, try trading your specific currency against currencies other than the greenback.
- Lower your leverage: The mix of high volatility and high leverage can be lethal to your trading account. Big moves in the right direction are excellent, but even if you got the big move correctly, a sudden swing to the wrong direction may be quite painful, as it may swing away a big chunk of your account. Higher volatility provides more opportunities but more risk. So, lower your leverage and consider smaller positions.
Editors’ Picks
EUR/USD recovers modestly, stays below 1.1900
EUR/USD gains traction and edges higher toward 1.1900 in the second half of the day on Thursday. The US Dollar struggles to benefit from the upbeat employment data following an initial positive reaction, allowing the pair to find a foothold.
GBP/USD holds above 1.3600 after UK data dump
GBP/USD clings to moderate gains above 1.3600 following the release of the UK Q4 preliminary GDP, which showed that the UK economy expanded at an annual pave of 1% in Q4. Meanwhile, the improving risk mood causes the USD to lose interest and helps the pair edge higher.
USD/JPY consolidates around 153.00 favoured by lower Fed easing bets
USD/JPY steadies around 153.00 after hitting two-week lows at 152.25. A strong US Nonfarm Payrolls report provided some support for the US Dollar on Wednesday. The Yen remains on track for a 2.6% weekly rally, boosted by Takaichi's victory at Sunday's elections.
Editors’ Picks
EUR/USD recovers modestly, stays below 1.1900
EUR/USD gains traction and edges higher toward 1.1900 in the second half of the day on Thursday. The US Dollar struggles to benefit from the upbeat employment data following an initial positive reaction, allowing the pair to find a foothold.
GBP/USD holds above 1.3600 after UK data dump
GBP/USD clings to moderate gains above 1.3600 following the release of the UK Q4 preliminary GDP, which showed that the UK economy expanded at an annual pave of 1% in Q4. Meanwhile, the improving risk mood causes the USD to lose interest and helps the pair edge higher.
Gold retreats from February highs, holds above $5,000
Gold corrects lower after touching a fresh February-high above $5,100 but manages to hold comfortably above $5,000. The positive shift seen in risk mood limits the safe-haven precious metal's strength, while the trading action remains choppy ahead of Friday's key US inflation data.
LayerZero Price Forecast: ZRO steadies as markets digest Zero blockchain announcement
LayerZero (ZRO) trades above $2.00 at press time on Thursday, holding steady after a 17% rebound the previous day, which aligned with the public announcement of the Zero blockchain and Cathie Wood joining the advisory board.
A tale of two labour markets: Headline strength masks underlying weakness
Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.