10:00 AM (EST) Update
Some are panicking and some are taking advantage of the chaos and making serious bank. Recession? Maybe. But I know I got into forex trading right at the 2008 market crash and made $10,000 in a month as a college student, which made me look really cool among my fellow students!
But what about all the people who are losing money at the moment? While I’m no expert in stocks, bonds or equities, one thing I do know is forex so here are 5 tips for your trading this week.
1- Stay away from long-term trades
The market saw massive volatility and it seems to be correcting at the moment, but nothing is fully clear. No body knows how China is going to surprise us next and how the market participants are going to react. The market direction MAY HAVE changed, but there still is no confirmation. Therefore if you are NOT in a long term trade, don’t get into one.
We are talking currencies here. For stocks, ETFs and other charted markets, different strategies apply.
2- Stay within the range
While trend trading might be tempting at the moment, as I said before, the market is extremely foggy at the moment.
The five points of the Invest Diva Diamond Analysis are all pointing to different directions when it comes to trends. However, one thing that seems to be happening is range. Spot bottoms or tops on shorter time frames such as the 4 hour chart, set your stop loss close to your entry and count on a few range pips to be earned
3- Do NOT use high leverage
Since the markets are not really foreseeable, try to avoid high leverage so if there is a sudden change in the market, you don’t end up wiping up your account.
As we covered in the Invest Diva Education Course, leverage is a double edged sword. While it can magnify your gains, it can at the same time multiply your losses as well. Invest Diva students already know to use high leverage when they have at least 90% confident in the market direction. It is safe to say that no one really has confident in the market direction at the moment.
4- Pair up strongest currencies with weakest ones
In yesterday’s update I ranked the new strength of the currencies after the “Black Monday” crash. Your best bet is trading currencies that have the highest down pressure, against the new safe havens.
View the currency strength list here.
5- Don’t trade if you don’t have time to check trades frequently
While in normal times we are a fan of identifying a strategy and letting the markets run our position, this strategy is no good during current market conditions. Trading short term means you have to at least check your position 5 times a day and be prepared to get out if the sentiment is not on your side. While you have set a stop loss for your position, you would still want to check the market sentiment, and if it is not strong enough to reach your target, you are better off just getting out with lower profit than staying in and hoping for the best.
My favorite quote from my book is more useful than ever this week:
Hope is not a good thing to have in forex trading
Good luck and if you need assistance with you trading strategies, book a private lesson with me now. It will be 87% off until end of this week.