Are You Using Trading Plans?
Fundamentals first: retail sales came in above expectations. Now let me ask you this? Is this back to school "sale" shopping? Are we paying full price? Is this rebound (the first in 5 months of data) due to more job security, a rosier future, etc... or because it was necessitated by the back to school rush/deals. We will find out during December's earnings periods where retailers show great numbers but poor margins. Keep an eye on retail sales as we head into the (gulp) next shopping period: the Holiday period. Let's see, we have about 130 days till Christmas. Did I just ruin your Fall for you?
Technically, ummm...you tell me. A lot to talk about or a little. Exactly. Oil is still holding, USO is holding and the USD/CAD is still holding above the .9900 level. I expect that to be taken out as it looks like we are due for a pop in equities, a pop in oil and a break of the USD. Although today, on the good retail sales number, we saw equities flat to up and the dollar showing strength. Is this because traders are worried that if data comes in positive there won't be QE3 and thus, the USD is oversold? I can't imagine a world without additional QE measures, so I am planning on a neutral to weak USD.
On to trading psychology. I think that trading plans fall into trading psychology. If you are creating one:
**developed and adhere to account and trade risk measures.
**you are assessing the markets
**creating reasons to enter the markets using fundamentals and technicals
**creating chart based exits for losses
**creating chart based exits for profits
**constantly analyzing the markets (based on your trading timeframe) for reasons to change your plan (massaging the trade)
Most importantly, you are using stops. You realize that anything can happen at any time and you understand that having a losing trade is part of the game. Join me tomorrow evening when I introduce a new IBFX webinar titled: "USING STOPS TO MANAGE TRADES"
Happy Trading and Be Environmentally Cool
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
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