Trading A Medium For Investing

Is Trading a Medium for Investing in Today’s Market Conditions?

NT101 LogoMost market articles are based and presented in their simplest form that are often used for discussions during every presentation, training seminar and workshop as relevant strategies that can be applied during actual and post trading activities. This helps traders and investors to develop a correct mindset by properly using appropriate trading techniques openly discussed in every possible market condition. 

Current Market Conditions

Certainly, most traders and investors have identified the major trend in the European major currency pairs for quite sometime. Although, majority of the trades made by main street investors and even institutional traders in the foreign exchange market have long been over-shadowed by the outstanding performance of the Stock market and their corresponding global indices. “No doubt, some have made their fair share of these lucrative moves.” The US Dollar maybe considered the only exception to this rule as the reversal / pivotal point came at the middle of 2014 and was acceptably recognized in the latter part of the 1st quarter of 2015.

Thus, the exceptional trend direction and continuing strength for the US Dollar became clearly visible with contrary opinions on the side; when it was driven higher along side the Dow Jones Industrial Average Index (DJIA); while registering newer highs fueled by several vital factors. The markets have been led by the majority of these fundamentally driven factors came primarily from the major central banks monetary policies, the weakness of its corresponding foreign currency counterparts, particularly the Euro and Pound Sterling, the declining price on Oil and better expectations / results from the US economy heading towards the opening 1st quarter of 2015.  This trend has been undisputed since then. And it’s only now after the end of the 1st quarter that such weakness and price pullback can now be seen, as the US Dollar’s gradual decline is in the making. These factors surrounding the market are just a few vital reasons influencing investor’s and trader’s sentiment on top of the geopolitical tensions in Ukraine sidelined with Greece and the EU countries involved in the current negotiations. 

Differentiating Markets:

In trading the forex market and differentiating it from the past few yeas can be defined within its price movements which in fact, has been incrementally small nowadays based on their respective daily price action. This literally mean, is that the trading sessions are based on a daily price range that used to be in triple digits on the daily average; contrary to only a double digit price swing in both directions of the market today. Those glory days are gone, as the new norm is where a total triple net change can be expected after a week or so. Not unless a series of risk events are in line for the week which would be the kind of market movers for these markets. That’s because the markets are relative and correlated with the different global exchanges among the major trading partners worldwide. Ripple effects do takes place before and after any major reports are released. 

At most times, making it more difficult for an average retail / main street trader to make a reasonable gain, while forcing traders to simply take what can be made or risk being taken out too early at a loss. These makes the trades at risk since the frequency of trade stops would or can be triggered quite often. Leaving the trader at the mercy of the market at most times due to several reasons which involves risk management.

A reasonable triple digit move on both directions would be good. Of course, whenever an exceptional risk event takes place periodically would be appropriate for short-term day traders. This is where broker/traders would more than welcome to have actively traded accounts, where frequent revenues come from. That is why the main orientation of most seminars is to capitalize short-term trades, where risk can be manageable contrary to staying in the market exposed and susceptible to adverse price fluctuation against the position.

Whenever other traders and analysts’ makes a presentation pitch will always show the overall picture of the trends and how much money could have been made while down-playing the corresponding & probable loss a trade could make as well. There are two sides of a coin so to speak; where risk will always be present in any financial instrument whether they be forex or stocks.

On the other hand, small increments on price movements should be welcomed as it provides patient investors to really come up with relatively good strategies, similar to how market strategist works and trades. Thus, such practice can be learned well so trades would not have to undergo too much price volatility in the market. Where the most common trades could get easily stop-out within a narrow trading range during a single session.

True value investing comes in when traders and investors have a combination of instruments in their respective portfolio. That is if one has an appropriate amount allocated for these markets and knows how diversification can be an advantage for every type of portfolio with the right objectives to be made.