Bullish fundamental facts from Europe

ECB expressed its’ ‘sincere’ desire to address the European crisis and is again willing to do anything it takes to stabilize the region’ economy. These comments after interest rates announcements are very important as they usually give momentum for currencies at least for a few weeks. These are periods of time when a trader can accumulate a big position in a currency that is about to strengthen and keep it for a few weeks to make nice profits. That is exactly what happened in eur/usd or eur/jpy pairs. These macroeconomic news put Euro back on its’ uptrend and this tendency of Euro strength may continue for a few weeks.

I will repeat myself again that one should only trade in the direction of the main trend and never against it. So, after ECB and BOE announcements of interest rates have been made one can expect Yen and US dollar to weaken and Euro, Pound and commodity currencies to strengthen. Just be sure not to risk too much, nor to overtrade. These things never increase your profits. Vice versa, it impedes you to take the best possible trades that are on the table. Stay patient and try adding to your position on dips.

Logics versus price action in fx trading

A lot of folks are searching for logics when they study fundamentals in Forex or any other financial market. And they fail. Fundamental news and price action rarely have common logics. You might have the most promising data and the market will still continue to fall and vice versa, you can have the most disappointing data and the market will continue rising. What to do in these kind of situations? You stop following your logics and try to understand market logics. 

Well, there isn’t much logics in that expect that markets run on expectations. That’s it! And do not try to think otherwise, because you will fail. You’d better change your mentality and try to understand where the market is headed by trying to figure out market expectations. I have been disappointed a lot of times seeing how market fundamentals and directions do not add up. There is a good article on the topic by Kathleen Brooks on trade2win website. Read it to expand your knowledge on the subject. Here is the article. 

Ok, there are just a few days left till 2013. I will write at least one post before the event. Happy Christmas season. Do not overtrade while waiting for the best opportunities.