Whenever I See This I Know It It Time To Sit On My Hands
|Traders,
One of the biggest challenges traders face is knowing when to simply not trade - or trade less/smaller positions. This is one of those times.
It can be a hard fact to come to terms with given how we view work as a society: put in a solid days work and collect a paycheck. Markets do not work that way though.
Traders will typically make 80% of their profits 20% of the time - so the old adage goes.
Right now, FX traders need to be aware of two things and be very clear about the implications
- The Dollar Index (DXY)
- Risk Reversals
DXY has either just completed a solid 5-wave move higher and is set for lower levels.....or, it is simply pause and due for another push higher. Sure, I know that is not terribly helpful, but that is the reality. At least that is how I see it.
In terms of the 1-Month 25 Delta Risk Reversals - that is a different story altogether - numbers are numbers - no subjectivity. Normally unless you see the PERCENTILE numbers reach extremes, you can expect price action to be fairly subdued. Only USD/CHF shows an 'extreme' reading right now. I am inclined to view that pair from the short side right now.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.