Dave Floyd
Aspen Trading Group
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.
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