Giles Coghlan LLB, Lth, MA
Financial Source
One of the weaknesses in macro trading is that you have a clear bias for a currency pair, but how do you manage risk properly?
For example, one central bank is on a rate-hiking cycle and another one is on a rate-cutting cycle. In this case, the medium-term direction of the pair is simple to predict. However, that doesn’t mean that there will not be short-term movements in the pair that are against the main medium-term direction. So how do you manage this?
Always be aware of what your risk is and use key technical levels to determine that risk. You can always re-enter at better prices, so don’t make the mistake of allowing a scenario where you are in large amounts of drawdown and have no idea about where and when you would exit the trade. This will impact your trading psychology and hinder your ability to make trading decisions.
Macro, fundamental trading is a great philosophy for trading the markets, but always make sure risk is known and managed from the start of the trade.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Editors’ Picks
EUR/USD: Upcoming PMIs could bring some relief
The growing downward pressure pushed EUR/USD to new lows around 1.0760 for the first time since late July. This move was largely driven by the US dollar’s strong performance and the lack of meaningful news from ECB policymakers.
GBP/USD tests 1.3000, faces headwinds due to dovish sentiment surrounding the BoE
The GBP/USD pair edges higher toward 1.3000 during Asian trading on Wednesday. However, the Pound Sterling faced headwinds due to declining consumer and producer inflation figures, coupled with weak labor market data in the United Kingdom.
USD/JPY clears key-technical levels, turns bullish above 152.00
The USD/JPY extended its gains sharply during Wednesday in the North American session, sponsored by the close positive correlation with the US 10-year T-note yield, while traders remain concerned about US elections. At the time of writing, the pair exchanges hands at 152.60, up by more than 1%.
Editors’ Picks
AUD/USD risks a deeper drop below 0.6600
AUD/USD quickly eroded Tuesday’s gains and came under renewed and quite strong selling pressure on Wednesday, challenging the 0.6620-0.6630 zone, where the critical 200-day SMA converges.
EUR/USD: Upcoming PMIs could bring some relief
The growing downward pressure pushed EUR/USD to new lows around 1.0760 for the first time since late July. This move was largely driven by the US dollar’s strong performance and the lack of meaningful news from ECB policymakers.
Gold declines to $2,720 corrective decline may continue
Gold price retreats from the all-time-high it set near $2,560 earlier in the day and trades slightly below $2,720. Rising US Treasury bond yields and the unabated US Dollar (USD) strength makes it difficult for XAU/USD to hold its ground midweek.
Ripple co-founder Chris Larsen misses key deadline, XRP slips nearly 3%
Ripple (XRP) trades at $0.5189 on Wednesday, October 23. The key market movers for the native token of the XRPLedger are the Securities & Exchange Commission’s (SEC) lawsuit against Ripple.
BRICS Russia summit begins with false claim the bloc has larger GDP than G7
Russian President Vladimir Putin should check his facts. In a speech at the BRICS Business Forum in Moscow on October 18, the Russian President came up with some interesting fantasy statistics about the size of the association’s GDP.
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